June 28, 2005

Bureaucrats and Indians

By JOHN TIERNEY

CROW AGENCY, Mont.

The Crow Indians rode with Custer at Little Bighorn, but they have since reconsidered. On the anniversary of the battle Saturday, they cheered during a re-enactment when Indians drove a stake through his fringed jacket and carved out the heart of the soldier going by the name of Yellow-Hair in Blue Coat Who Kills Babies, Old Men and Old Women.

Their revised opinion is understandable considering what has happened to them since that battle to get their valley back from rival tribes. Today it's a Crow reservation with enough land and mineral resources to make each tribe member a millionaire, yet nearly a third live below the poverty level, and the unemployment rate has reached 85 percent.

What went wrong? Before Custer, the Crows had prospered by trading with whites, but he represented a new kind of white: the one who tells you he's from Washington and he's here to help you. As the economists Terry Anderson and Fred McChesney have documented, the downfall of the American Indians correlates neatly with the rise of two federal bureaucracies.

The first was the standing army established during the Mexican War of the 1840's. Before then, settlers who wanted Indian land usually had to fight for it themselves or rely on local militias, so they were inclined to look for peaceful solutions. From 1790 to 1840, the number of treaties signed with Indians each decade far exceeded the number of battles with them.

But during the next three decades there were more battles than treaties, and after the Army's expansion during the Civil War the number of battles soared while treaties ceased. Settlers became an adept special interest lobbying for Washington to seize Indian land for them. For military leaders, the "Indian problem" became a postwar rationale for maintaining a large force; for officers like Custer, battles were essential for promotions and glory.

Indians no longer had any bargaining power, and they were powerless to resist the troops that avenged Custer's death. They were consigned to reservations and ostensibly given land, but it was administered by another bureaucracy, the agency that would grow into what's now the Bureau of Indian Affairs.

The agency, in addition to giving some of the best land away to whites, allotted parcels to individual Indians with the goal of gradually transferring all the land and ending federal supervision. But what self-respecting bureaucrats work themselves out of a job?

As the land under their control dwindled, they presumed that Indians were not "competent" to own land outright. It had to be placed under the agency's own enlightened trusteeship. They kept allotting parcels of this "trust land" to individual Indians, but an Indian couldn't sell or lease his parcel without permission from the Bureau of Indian Affairs.

The rules discouraged sales and encouraged parcels of land to be passed on to multiple heirs. Today it's common to find a tract with dozens or hundreds of owners. Instead of inheriting the family ranch, which they could work themselves or use as collateral to start another business, these Indians inherit the right to collect checks from the federal bureaucrats who lease their land to others, usually non-Indians.

The system leaves Indians with little incentive to work their land or extract the maximum value by improving it. Not surprisingly, Dr. Anderson finds that trust lands are only half as productive as the other parcels of private land on the reservation that were given outright to Indians under the old system.

Some Indians are trying to go back to the old system, but it's not easy, as Gus Gardner has discovered. For five years he has been hoping to exchange his trust lands -- tiny portions of more 100 different tracts on the Crow reservation -- for one big piece of land for his own cattle ranch. But he figures the paperwork involved will take at least another three years.

"Just give me a regular deed to land that I own and let me go on my own," he said. That sounds like a reasonable enough request in a capitalist country, but changing the current system seems politically unrealistic. It has too many defenders at the local and state level whose living depends on it.

Cutting paperwork means cutting bureaucrats' jobs, a feat that makes killing Yellow-Hair in Blue Coat look easy. No one has yet figured out how to drive a stake through the heart of White-Collar With Red Tape.

E-mail: tierney@nytimes.com

For Further Reading:

The Wealth of Indian Nations: Economic Performance and Institutions on Reservations by Terry L. Anderson and Dominic P. Parker, June 2004, 42 pp., working paper.

The Not So Wild, Wild West: Property Rights on the Frontier by Terry L. Anderson and Peter J. Hill, Stanford University Press, 256 pp., May 2004.

Property Rights: Cooperation, Conflict, and Law edited by Terry L. Anderson and Fred S. McChesney, Princeton University Press, 448 pp., 2002.

For more information, go to: www.perc.org.

Outside interests such as timber, railroad companies, and homesteaders, wanted more Indian land and sought to gain use and control of select lands within reservation treaty boundaries. These entities put pressure on the federal government to allow access and title to these lands.

In total disregard of the treaties, the Dawes Act was implemented. Individual tribal members were allotted -- 160, 80, and 40 acre -- parcels. Remaining reservation (treaty) lands were declared surplus and sold to non-Indians through surplus land sales. This action was in direct violation of the treaty agreements and resulted in Indians losing title to 90 million acres of land.

Prior to the Allotment Act tribal land holdings totaled 138 million acres. By the and of the allotment period in 1934, nearly 90 million acres held passed out of Indian ownership. Today, the reservations total some 56 million acres of which 11 million acres (20%) are allotted. (See ILWG Land Consolidation Manual for historical and present day details).

The Allotment Act was one of the most devastating pieces of legislation ever passed in terms of reduction of tribally owned lands, breakdown of Indian culture, and creation of some of the greatest bureaucratic barriers to Indian use and control of the land base.

The U.S. Federal Government began the policy of allotting Indian land as early as 1798. Several treaties with Indian tribes included provisions that stated land would be divided among their individual members. After 1871, however, Congress declared that no further treaties would be made and all future dealings with Indians would be conducted through legislation. Although Congress passed a few acts that allotted land on specific Indian reservations, there was no vehicle to allot lands to individual Indians across the United States. Eventually, there was a push for a national federal policy to break up Indian land and assimilate native people.

The allotment advocates had several reasons for supporting allotment. First, they considered the Indian way of life and collective use of land as communistic and backwards. They also saw the ownership of private property as an essential part of civilization that would give Indians a reason to stay in one place, cultivate land, disregard the cohesiveness of the tribe, and adopt the habits, practices, and interests of the new settler population. Furthermore, many thought that Indians had too much land. These people were eager to see Indian lands opened up for settlement as well as for railroads, mining, or forestry.

The allotment advocates eventually succeeded in convincing the federal government to adopt the policy nationally. In 1887, Congress passed the General Allotment Act. The Allotment Act was applied to reservations by the president whenever, in his opinion, it was advantageous for particular Indian tribes. Members of the selected tribe or reservation were given permission to select pieces of land—usually around 40 to 160 acres in size—for themselves and their children. If the amount of reservation land exceeded the amount needed for allotment, then the federal government could negotiate to purchase the land from the tribes and then sell it to non-tribal settlers. Sixty million acres were either ceded outright or sold to non-Indian homesteaders and corporations as "surplus lands".

Despite the original safeguards in place to help native people retain their land, the General Allotment Act caused their holdings to plunge from 138 million acres in 1887 to 48 millions acres by 1934. This happened for several reasons. First, on many reservations, the most productive land was often sold-off as "surplus" to non-Indians. In addition, many Indians did not become the farmers the U.S. Government wanted them to be. The General Allotment Act did not provide for agricultural education or farming equipment and for some native groups, intensive agriculture was culturally unacceptable. Often cut off from their older ways of survival, some Indians were convinced to sell their land after the 25-year trust period because in their poverty they had nothing else to sell.

Amendments to the General Allotment Act also made it easier for Indian land to pass into non-Indian hands. For example, in 1902 legislation known as the "Dead Indian Act" was passed that allowed Indians to sell lands they inherited even if it was still in trust. In 1906, the Burke Act was passed, which authorized the Secretary of the US Department of the Interior to decide whether an Indian was "competent" to manage their lands or not. If the Indian was "competent", then the Secretary could take the land out of trust and the land would then become taxable. The Secretary of the Interior was authorized to do this without the knowledge or against the wishes of the allottee. Thus, many Indians ended up having to sell their lands because they owed taxes on land they thought was in trust. Twenty-seven million acres of Indian land were lost this way. With the Act of May 29, 1908, the Secretary of the Interior was also given power to sell the allotments of deceased Indians if he deemed the heirs incompetent.

So much Indian land was passing out of Indian hands that even the U.S. Government became alarmed. In 1928, a government report entitled "The Problem of Indian Administration" (also known as the "Merriam Report") sharply criticized the policy of allotment and the U.S. Indian Service in general. The report provided undeniable evidence of the destructiveness of federal Indian policy and spurred significant changes in the federal administration of Indian affairs.

Wall Street Journal
Nov. 22, 1995

How the Government Keeps Indians in Poverty

By Terry L. Anderson

I learned that some land on reservations is privately owned, not controlled by the Bureau of Indian Affairs (BIA). Other land is allotted to individual Indians but held in trust by the Bureau of Indian Affairs (individual trust land); and some belongs to the tribe but also is held in trust by the BIA (tribal trust land).

The land that is privately owned is far more productive than the other two categories of tenure. Indeed, a study of agricultural land on a large cross-section of Western reservations indicates that tribal trust land is 80% to 90% less productive than privately owned land. Individual trust land is 30% to 40% less productive.

These results do not necessarily argue for "privatization" of reservations, a proposal that would be opposed by nearly all tribes. But, somehow, the productive success that private property makes possible must be made available to all Native Americans.

Certainly, it is not now. BIA trusteeship imposes layers of bureaucracy and legal constraints on Indian land-use decisions. For example, banks are unwilling to make loans for improvements on trust lands because it is nearly impossible to repossess trust land if a borrower defaults on a loan. Tribal politics often compound BIA trust constraints, as tribal council meetings become a vehicle for political patronage. A member of the Crow tribe in southeastern Montana comments: "Like grass-hoppers, clans jump back and forth between factions" to garner political rewards.

Tribes have sought to unshackle themselves from the BIA through "self-determination," and, for the first time in decades, the devolution mood in Congress offers a chance for them to push their cause. But economic success requires that tribes reward individual initiative and constrain tribal politics. Some reservations have managed to do this. For example, the Confederated Salish and Kootenai on the Flathead Reservation have been successful at starting small businesses and at managing their timber resources. The White Mountain Apache operate a sustainable logging operation, a successful ski facility, and a lucrative elk hunting camp, all without BIA control. In both these cases individuals are rewarded for their initiative and tribal governments refrain from counterproductive redistribution.

The baseball teams that were targeted for their nicknames provide a useful analogy. To win a game, each player must produce home runs or diving catches, but these individual exploits must be coordinated to make the double play or sacrifice out successful.

American Indians can reach back into their rich cultural heritage to find institutions that strike this balance. Throughout Native American history, the braves, warriors, and chiefs—the heroes for whom sports teams are named—rewarded individual effort while coordinating efforts through tribal governance. Riding a horse into a stampeding herd of buffalo, for example, required tremendous individual skill, and this skill was rewarded. Hunters marked their arrows so that the successful hunter would be known. The animals then belonged to the brave who launched the lethal arrow; he could divide the meat and the skins as he saw fit. At the same time, a cooperative effort was necessary to keep the herd from stampeding prematurely, so a hunt chief coordinated the overall activity.

All too often in reservation economies, the role of the individual hunter has been neglected. It's time for that to change. Some reservations, such as the Flathead and White Mountain Apache, have loosened the BIA grip and shown the rewards of self-determination. The key is for other tribes to take this initiative and for Congress and federal bureaucrats to give Native Americans the freedom they deserve.

Property Rights and Indian Economies

Terry L. Anderson Editor

Most research on American Indian economies seeking to explain why Indians have remained near the bottom of the economic ladder has concentrated on resource endowments. This approach has focused policy attention on creating government programs to expand resource exploitation either by encouraging non-Indians to develop reservation resources or by directly enhancing reservation physical and human capital. However, these policies have ignored institutions and the important role of local customs and privileges. This book explicitly considers this institutional context and focuses on the rules that determine who controls physical and human resources and who benefits from their use. The authors consider the three main ingredients necessary for successful economies: stable government, minimal bureaucracies, and the rule of law.