In 1822, the government run trading houses among the Indians had served their purpose. Sadly, the Indians had been reduced to a life of dependence upon the United States. They were no longer a major threat, and the trading houses were unprofitable. After a quarter of a century, it was time to privatize the Indian trading houses. It was the end of an era, and end of the federal government's "Indian Civilization Program".
The trading houses were much more than just a place of trade. It was an attempt by the United Sates Government to establish friendly relations with the Indians, maintain peace, and bring them into an agrarian and husbandry way of life. In 1796, Congress enacted "An Act to Regulate Trade and Intercourse with the Indian Tribes, and to Preserve Peace on the Frontiers". This act defined the boundaries between the United States and the Indian tribes as established by treaties and regulated the interactions between the Indians and Americans. The act regulated all trade with the Indian tribes, making it illegal for any individual to establish a trading house or sell horses without being officially licensed by the U.S. government. Furthermore, the act granted the President the ability to furnish the tribes with "useful domestic animals", "implements of husbandry", and "goods or money", and appoint temporary agents to live among the Indians to promote civilization. The intention of the act was to maintain friendly relations. There was little or no intention of profiting off of any trade.
Under this act, the United States government maintained a factory of trading networks with the Indians. By 1808, there were 14 trading houses established from Missouri to Chicago to Sandusky on Lake Erie. Trading houses were setup and run by the federal government. One of the more famous agents was Benjamin Hawkins. In 1796, Hawkins was appointed General Superintendent of Indian Affairs, and given responsibility for dealing with all tribes south of the Ohio river and was principal agent to the Creek tribe. Hawkins studied their language and was adopted by the Creek. He began to teach European-American agricultural practices to the Creek. Hawkins established his agency in Creek territory and built a sawmill, gristmill and a trading post. For the next 19 years, Hawkins continued to work to establish peace between the settlers and the tribes, but saw much of this work destroyed in 1812, when a group of Creek rebels, known as the Red Sticks tried to revive traditional ways and halt the encroachment of the new Americans. Benjamin Hawkins remained superintendent of Indian affairs until his death in 1816. Hawkins work provided the most clear evidence that the original goal of the trading houses was not profit, but rather to maintain friendly relations with the different tribes. Unfortunately overtime this changed.
During the War of 1812, the government-run trading houses had become unprofitable. After the war, when the London Convention in 1818 established the 49th Parallel as the northern boundary between the United States and British. Trade with the Indians in these areas, was now exclusive to the Untied States. A Superintendent of Indian trade within the War Department, known as the "Office of Indian Trade" was in charge of maintaining the trading houses. By 1820. Secretary of War John C. Calhoun reported that the Indians had now become wholly dependent on Trade with the United States from the Atlantic coast to the Mississippi and down to the Gulf of Mexico. And now, with the war over, peace with the Indians was no longer the major concern. The Indians were reduced to being dependent upon trade with the United States, so Calhoun recommended that the United States take complete control over the Indians, exclusively providing for their needs through a judicious system of fair trade. Calhoun proposed that the trading houses be replaced with a system that granted trading licenses to U.S. citizens of good moral character. Trading houses would require a separate license, and all liquor sales should be strictly prohibited.
At the same time private trading companies saw an opportunity to take over and make money. So they lobbied for the privatization of the trading houses. With the Calhoun report in hand, and lobbyists in their pockets, Congress responded by passing "An act to abolish the United States trading establishments". As recommended by Calhoun, they included a requirement that the private trader obtain licenses and that sale of alcohol be restricted. The act closed all federal trading houses among the Indian tribes and called all Indian agents to the office of Indian trade in Georgetown. Each agent was to turn over there goods, wares and merchandise to be placed at the disposition of the President. Any proceeds were to be used to pay debts with anything left over to be paid to the treasury of the United States. The final section of the act, required the president to report to Congress the manner in which the act was carried out, showing "the amount of moneys, furs, peltires and other effects".
In his 1822 State of the Union Address, President James Monroe gave an overview of the act, and promised to provide a full report of the proceedings as soon as it is received.
"In compliance with the act of the last session entitled "An act to abolish the United States trading establishments", agents were immediately appointed and instructed, under the direction of the Sec of the Treasury, to close the business of the trading houses among the Indian tribes and to settle the accounts of the factors and sub-factors engaged in that trade, and to execute in all other respects the injunction of that act in the mode prescribed therein. A final report of their proceedings shall be communicated to Congress as soon as it is received."http://www.presidency.ucsb.edu/ws/index.php?pid=29464
American Indian History Day by Day: A Reference Guide to Events, Roger M. Carpenter ABC-CLIO (2012) pg 147
http://www.alabamapioneers.com/there-were-14-indian-government-trading-houses-established-in-1796-here-is-where-they-were/
http://avalon.law.yale.edu/18th_century/na030.asp
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