The New Trail of Tears. Naomi Schaefer Riley
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 them.
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