The United States Government Fur Trade Factory System was a system of government trading without profit with Native Americans that existed between 1795 and 1821.
The factory system was set up on the initiative of George Washington who thought it would neutralize the influence of British traders doing business on United States territory. As an honest alternative to private trade it would also further the prestige of the United States among Native Americans. Thomas Jefferson shared Washington's expectations, but was also hoping that leading men of the
Indian Nations
This is a list of Indian reservations and other tribal homelands in the United States. In Canada, the Indian reserve is a similar institution.
Federally recognized reservations
There are 326 Indian Reservations in the United States. Most of ...
would go into debt and be forced to cede land to pay it off.
Private interests generally criticized the factory system. American Fur Company was hurt by competition from the government's trading houses and began a campaign to have them closed down. In 1821, Senator Benton of Missouri, who stood in a close relationship with that company's owner,
John Jacob Astor
John Jacob Astor (born Johann Jakob Astor; July 17, 1763 – March 29, 1848) was a German-American businessman, merchant, real estate mogul, and investor who made his fortune mainly in a fur trade monopoly, by History of opium in China, smuggl ...
, started hearings with the aim to abolish the factory system and open the fur trade for uninhibited private enterprise. Among the system's defenders were the future Vice President
Richard Mentor Johnson
Richard Mentor Johnson (October 17, 1780 – November 19, 1850) was an American lawyer, military officer and politician who served as the ninth vice president of the United States, serving from 1837 to 1841 under President Martin Van Buren ...
and the future President
Martin Van Buren
Martin Van Buren ( ; nl, Maarten van Buren; ; December 5, 1782 – July 24, 1862) was an American lawyer and statesman who served as the eighth president of the United States from 1837 to 1841. A primary founder of the Democratic Party (Uni ...
. Nevertheless, Congress abolished the government fur trade factories in 1821, giving the government one year to liquidate the system.
Background
The United States had inherited the concept of government regulation of
Indian trade
The Indian Trade refers to historic trade between Europeans and their North American descendants and the Indigenous people of North America, and the First Nations in Canada, beginning before the colonial period, continuing through the 19th century ...
from Britain.
Continental Congress
The Continental Congress was a series of legislative bodies, with some executive function, for thirteen of Britain's colonies in North America, and the newly declared United States just before, during, and after the American Revolutionary War. ...
outlawed unlicensed trade with the
Indian Nations
This is a list of Indian reservations and other tribal homelands in the United States. In Canada, the Indian reserve is a similar institution.
Federally recognized reservations
There are 326 Indian Reservations in the United States. Most of ...
in 1776 and the
Confederation Congress
The Congress of the Confederation, or the Confederation Congress, formally referred to as the United States in Congress Assembled, was the governing body of the United States of America during the Confederation period, March 1, 1781 – Mar ...
added stricter regulations in 1786.
Indian agents
From the 1870s until the 1960s, an Indian agent was the Government of Canada, Canadian government's representative on First Nations in Canada, First Nations Indian reserve, reserves. The role of the Indian agent in Canadian history has never been ...
were only to issue licenses to citizens whose moral characters were vouched for by the appropriate
governors
A governor is an administrative leader and head of a polity or political region, ranking under the head of state and in some cases, such as governors-general, as the head of state's official representative. Depending on the type of political ...
. The licenses were issued for one year periods only and cost $500 per period. A bond of $5,000 had to be given to ensure compliance with alcohol and firearms rules. Subsequent
Nonintercourse Act
The Nonintercourse Act (also known as the Indian Intercourse Act or the Indian Nonintercourse Act) is the collective name given to six statutes passed by the Congress in 1790, 1793, 1796, 1799, 1802, and 1834 to set Amerindian boundaries of re ...
s of 1790, 1793, 1796 and 1802 modified these laws. Licence fees were eliminated, lighter penalties were introduced for non-observance of regulations and the moral character clause was removed.
Jay Treaty
The Treaty of Amity, Commerce, and Navigation, Between His Britannic Majesty and the United States of America, commonly known as the Jay Treaty, and also as Jay's Treaty, was a 1794 treaty between the United States and Great Britain that averted ...
of 1794 gave British subjects the right to acquire licenses for trading on United States territory.
Treaty of Ghent
The Treaty of Ghent () was the peace treaty that ended the War of 1812 between the United States and the United Kingdom. It took effect in February 1815. Both sides signed it on December 24, 1814, in the city of Ghent, United Netherlands (now in ...
1815 did not renew the right of the British to follow the trade across the international border and the guaranteed access to the Mississippi River that was granted them in the Jay Treaty. Through the
lobbying
In politics, lobbying, persuasion or interest representation is the act of lawfully attempting to influence the actions, policies, or decisions of government officials, most often legislators or members of regulatory agency, regulatory agencie ...
of John Jacob Astor, Congress in 1816 outright banned foreigners from the fur trade other than in a subordinate capacity.
Legislative history
In his 1793
State of the Union Address
The State of the Union Address (sometimes abbreviated to SOTU) is an annual message delivered by the president of the United States to a joint session of the United States Congress near the beginning of each calendar year on the current conditi ...
,
President Washington
George Washington (February 22, 1732, 1799) was an American military officer, statesman, and Founding Father who served as the first president of the United States from 1789 to 1797. Appointed by the Continental Congress as commander of t ...
suggested that a scheme of trading without profit with the Indian Nations would gain their friendship and fealty. The president repeated his idea in the next annual message to Congress and in 1795 a bill was passed for a limited test of the plan in the form of a $50,000 appropriation for trade goods to be sold at locations decided by the president. The following year a definite system was established by law. The president was to appoint
factor
Factor, a Latin word meaning "who/which acts", may refer to:
Commerce
* Factor (agent), a person who acts for, notably a mercantile and colonial agent
* Factor (Scotland), a person or firm managing a Scottish estate
* Factors of production, suc ...
s residing at government trading posts and selling goods in the Indian country. They were prohibited from trading on their own behalf and had to give account of all money, goods and furs received and sold. An additional funding of $150,000 gave a total capital of $200,000 to the factory system. The trade goods were to be sold at prices that maintained the
principal sum
Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...
but gave no profit. An annual amount of $8,000 was allotted for maintenance of the physical assets. The law was limited to two years plus the duration of Congress.
When the law of 1796 expired on March 4, 1799, the factories continued in operation anyway. In 1802,
President Jefferson
Thomas Jefferson (April 13, 1743 – July 4, 1826) was an American statesman, diplomat, lawyer, architect, philosopher, and Founding Fathers of the United States, Founding Father who served as the third president of the United States from 18 ...
pointed out that the enabling act had become invalid and Congress subsequently renewed it until March 4, 1803. In 1803, the law was extended for another two years plus the duration of Congress. In 1805 the act again expired, regardless of which Congress appropriated an additional $100,000 for setting up several new fur trade posts. The law was again renewed in 1806, now also authorizing the President to establish factories on both side of the
Mississippi River
The Mississippi River is the second-longest river and chief river of the second-largest drainage system in North America, second only to the Hudson Bay drainage system. From its traditional source of Lake Itasca in northern Minnesota, it f ...
. The capital was set to $260,000 and an annual allocation of $13,000 for staffing was given. In 1809, the capital was increased to $300,000 with further appropriations for clerks and factors. In 1811, a year before the formal expiration of the 1809 act, the law was renewed. Renewals of the act then took place in 1815, 1817, 1818, 1819, 1820 and 1821.
Objectives
Washington recommended the factory system to Congress because he believed it would undercut the influence of British traders in the Indian country. As it would protect Native Americans from fraud and deceit it would enhance the prestige of the United States among them. The Department of the Treasury optimistically reported in 1800 that the Indian Nations were pleased with the government trading houses because through them they were sure to find a buyer for their furs as well as a fair treatment. Sale of alcohol was prevented and the business of the
North West Company
The North West Company was a fur trading business headquartered in Montreal from 1779 to 1821. It competed with increasing success against the Hudson's Bay Company in what is present-day Western Canada and Northwestern Ontario. With great weal ...
, the largest Montreal trading firm, was cut short.
In a message to Congress in 1802, Jefferson claimed that the government factories undersold private and foreign interest, driving them away and thereby ridding the Indian country of a class of men that undermined the United States in the eyes of the Native Americans. Recommending an expansion of the factory system, he portrayed it as a means of making the Native Americans adopt a sedentary lifestyle. Once settled as agriculturalists they would be willing to sell surplus land not needed for hunting. On several occasions, Jefferson wrote to various officials that the job of the trading posts was to encourage indebtedness beyond the leading men's personal ability to pay thereby goading them into surrender land to get rid of the debt. Several treaties ceding land to the United States also clearly states that the Indian Nations were selling in order to get rid of debts run up at a federal factory.
Organization
At the very beginning, the
Purveyor of Public Supplies
The Purveyor of Public Supplies was the government official in charge of most government procurement in the early Republic, including the procurement of all military and naval supplies except food. The office was established in 1795 and superseded ...
was in charge of buying the merchandise to be sold at the government factories and also for selling the furs and other items received in trade. Military agents of the War Department usually handled transportation of the goods. In 1796, John Harris, the Keeper of Military Stores in Philadelphia, took over the reception and selling of goods obtained in trade. The Purveyor of Public Supplies continued to buy merchandise for the factories. In 1801, William Irvine, Superintendent of Military Stores, was appointed Agent for the fur trading factories in addition to the office he already held.
He was to receive and sell goods received and give the Secretary of War estimates of merchandise needed by the factories. When he died in 1804, George Ingels, Military Storekeeper at Philadelphia was appointed Acting Superintendent of Military Stores and Acting Agent for the Indian Factories. In 1805, William Davy was appointed Principal Agent for Indian Factories. He was to handle both the purchase of merchandise for the factories and the disposal of goods received from them, thereby also assuming the job previously done by the Purveyor of Public Supplies.Hill 1965, p. 15.
In 1806, John Shee was appointed Superintendent of Indian Trade, in charge of both the purchase of merchandise for the factories and the disposal of goods received from them. At first his office was called "Office of the Superintendent of Indian Trade" but from 1808 "Office of Indian Trade" or "Indian Trade Office". The office was first established in Philadelphia, but was required by law to move to the District of Columbia. Shee were not willing to move with it and John Mason was appointed Superintendent and the Office was moved to Georgetown. In 1816, Mason was replaced by Thomas L. McKenney. The Office of Superintendent of Indian Trade was under the supervision of the
Secretary of the Treasury
The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...
until 1811 when it was moved from the Treasury to the
War Department War Department may refer to:
* War Department (United Kingdom)
* United States Department of War (1789–1947)
See also
* War Office, a former department of the British Government
* Ministry of defence
* Ministry of War
* Ministry of Defence
* D ...
.
Factors were in immediate charge of the several factories. They received merchandise which they traded in exchange for Native American goods, mostly furs and skins. Other employees of the factory system, many on a part-time-basis, handled purchasing and transportation in Philadelphia, New York, New Orleans, Savannah, Albany and St. Louis. The furs received in trade at the factories were from 1806-1809 sold at public auction. This ended because the market became oversupplied and the prices low.
Operations
President Washington insisted that government trade with the Indian Nations be free of fraud and extortion, supply merchandise plentifully and without delay and provide a market for Native American goods at fair and stable prices. The merchandise was limited to products of the domestic market and hence not always of the highest quality. They were often inferior to products imported from England by private merchants. The
Embargo Act of 1807
The Embargo Act of 1807 was a general trade embargo on all foreign nations that was enacted by the United States Congress. As a successor or replacement law for the 1806 Non-importation Act and passed as the Napoleonic Wars continued, it repr ...
and the Non-Intercourse Act of 1809 made it more difficult for private traders to acquire foreign goods. British traders avoided that problem as their import from England went to Montreal and from there to Pittsburgh, down the Ohio and up the Mississippi.
The merchandise included blankets, strouds, siamoise cotton, mammoodies cotton,
calamanco
Calamanco (also calimanco, callimanco, or kalamink) is fabric with a glazed surface that was popular in Europe and the United States in the 18th and 19th centuries. It was typically made of worsted-spun wool yarn, and the glazing was achieved by ca ...
gorget
A gorget , from the French ' meaning throat, was a band of linen wrapped around a woman's neck and head in the medieval period or the lower part of a simple chaperon hood. The term later described a steel or leather collar to protect the th ...
s, kettles, tin cups, cowbells, maul rings, hoes, frying pans, arm bands, shirts, earbobs, silk stock, tinsel hatbands, jew's harps, side-saddles, wampum, trinkets, coffee, and food items. Transportation of merchandise to the factories was a costly, laborious and many times inefficient procedure, often requiring several transshipments. Merchandise bought at Philadelphia, and later Georgetown, was received by forwarding agents in New Orleans, St. Louis or Detroit who distributed them to the factories by boats, wagons or pack horses.
The merchandise was primarily sold at the factories, but the factors also sent out traders to reach Native Americans who lived far away.
In trade, the factories received furs, skins, beeswax, tallow, bear oil, feathers and other products. Soldiers, private traders, travelers and others paid in cash. The trade goods were shipped to New Orleans, St. Louis and Detroit. Some items were sold there, but most of it was shipped to Philadelphia and later Georgetown. Merchandise was sold at a 68% markup over market costs. Non-Native Americans were charged 10% more. Business at the factories reflected the general economic situation in the country. After the
War of 1812
The War of 1812 (18 June 1812 – 17 February 1815) was fought by the United States of America and its indigenous allies against the United Kingdom and its allies in British North America, with limited participation by Spain in Florida. It bega ...
there was a steady rise in the volume of business until the
Panic of 1819
The Panic of 1819 was the first widespread and durable financial crisis in the United States that slowed westward expansion in the Cotton Belt and was followed by a general collapse of the American economy that persisted through 1821. The Panic ...
. The factory at Green Bay, Wisconsin showed a decline in business already in 1818, as a result of the establishment of the American Fur Company in the area.
Criticism and support
The factory system was routinely denounced by its rivals in the private sector. It happened that private traders told Native Americans that the goods sold at the factories were intended to be gifts from the government, but that the factors sold them for their own personal gain. The frontier press regularly censured the factory system and prominent businessmen added their political influence to its detractors. The American Fur Company was hurt by competition from the government trading houses and began a campaign to have them closed down. In 1815, Governor Edwards of the Illinois Territory presented criticism that originated with the fur trader
Auguste Chouteau
René-Auguste Chouteau, Jr. (September 7, 1749, or September 26, 1750 – February 24, 1829Beckwith, 8.), also known as Auguste Chouteau, was the founder of St. Louis, Missouri, a successful fur trader and a politician. He and his partner had a m ...
of St. Louis. The gist of it was that the factor's lack of profit interest made them lax businessmen. In addition, the federal appointees were ignorant of Native American ways and languages.
Supporters of the government's involvement in the fur trade were usually found among philanthropists, government officials and among most of the factors themselves. Its existence was upheld by several Congress committees and of Congress itself. The Superintendent of Indian Trade, Thomas McKenney, was the most vigorous defender of the factory system. He regarded private traders as the root of most evil in the Indian country and wanted the factory system to be a means for "civilizing" Native Americans. George C. Sibley, a vehement critic of fur traders and fur trading companies agreed with the Superintendent in his assessment of the negative effects of the private fur trade.Madison's administration did not share the trust in private business expressed by many critics of the factory system. In 1816, Secretary of the Treasury, William H. Crawford proposed more stringent regulations for private fur traders. Nor did the Monroe administration trust the unselfishness of private interests. Secretary of War, John C. Calhoun urged stricter licence requirements for private fur traders in 1818. According to him, aliens and other dishonest fortune hunters were debauching the Native Americans through illegal whiskey.
Committee on Indian Affairs
The Senate Committee on Indian Affairs is a committee of the United States Senate charged with oversight in matters related to the American Indian, Native Hawaiian, and Alaska Native peoples. A Committee on Indian Affairs existed from 1820 to 1 ...
, started hearings with the aim to abolish the factory system and open the fur trade for uninhibeted private enterprise.Way 1919, p. 231. Benton claimed that as a citizen of a frontier state he had a better understanding than most of the systems supporters of how it worked. However, other motives can also be found. Among his constituents were several powerful fur traders.Wesley 1935, p. 50. Benton was on a
retainer
Retainer may refer to:
* Retainer (orthodontics), devices for teeth
* RFA ''Retainer'' (A329), a ship
* Retainers in early China, a social group in early China
Employment
* Retainer agreement, a contract in which an employer pays in advance for w ...
from the American Fur Company as their lawyer and acted as John Jacob Astor's spokesperson in the Senate, while that role in the House was filled by John Floyd of Virginia. At this point in time he was also in considerable pecuniary difficulties due to a bank failure in Missouri.
Benton argued that the factory system had been established to contest the influence of the British fur traders that made business on United States territory under the Jay Treaty. But now, when that treaty was superseded and the law kept alien fur traders away there was nothing that motivated government factories. Instead, the system proved the inherent unfitnes of the federal government to conduct commercial business. It was full of undetected abuse. Trade goods provided by the government did not meet the needs of its Native American customers. The merchandise was purchased at excessive costs at inconvenient locations from eastern businessmen, when suitable articles could have been found at lower prices in Pittsburgh or St. Louis thereby also saving on transportation costs. The sale of furs at Georgetown meant that the government received lower prices than if they had been sold in St Louis. The matter was referred to the Indian Affairs Committee which heard testimony from interested parties, fur traders, Indian agents, factors and the Superintendent of Indian Trade.
Some of the witnesses that faulted the factory system and its employees were individual traders and Indian agents that were eager to remove competition, while others were employees of John Jacob Astor.
Ramsay Crooks
Ramsay Crooks (2 January 1787 – 6 June 1859) was an American fur trader who immigrated to Canada from Greenock, Scotland. He was the father of American Civil War Colonel William Crooks who served in the 6th Minnesota Regiment. In 1803 Ramsay w ...
was the general manager of the American Fur Company, while Indian Agent
Benjamin O'Fallon
Benjamin O'Fallon (1793–1842) was an Indian agent along the upper areas of the Mississippi and Missouri Rivers. He interacted with Native Americans as a trader and Indian agent. He was against British trappers and traders operating in the Unite ...
had been appointed on the recommendation of Astor. Antagonism existed between Indian agents and the Office of Indian Trade, while the agents were in tender harmony with the fur traders they licensed. The newly appointed Indian Agent John Biddle affirmed "the uselessness" of the factory system.
Superintendent McKenney argued for the factory system while admitting some of the claims made by Benton. Congress required his office to procure trade goods on the home market, thereby putting a severe handicap on the factory system. Much merchandise had been bought during or just after the War of 1812, when the prices were two-fold or threefold the current. The prices charged Native Americans were not outrageous when considering freight and haulage. McKenney claimed that intrigues of the American Fur Company harmed the official trade to the extent that the posts at Chicago and Green Bay was about to be closed down. Indian Agents were intimidated by threats of removal through the political influence of Mr. Astor. As proof of this, he claimed that
John Kinzie
John Kinzie (December 23, 1763 – June 6, 1828) was a fur trader from Quebec who first operated in Detroit and what became the Northwest Territory of the United States. A partner of William Burnett from Canada, about 1802-1803 Kinzie moved ...
, an agent of the American Fur Company, had been found selling alcohol to Native Americans in Milwaukee, but no actions against him had been taken.
Finally, the Committee on Indian Affairs reported a bill abolishing the factory system.Coman 1911, p. 383. In the debate in the Senate, the existing system was defended by Henry Johnson,
Richard Mentor Johnson
Richard Mentor Johnson (October 17, 1780 – November 19, 1850) was an American lawyer, military officer and politician who served as the ninth vice president of the United States, serving from 1837 to 1841 under President Martin Van Buren ...
,
Martin Van Buren
Martin Van Buren ( ; nl, Maarten van Buren; ; December 5, 1782 – July 24, 1862) was an American lawyer and statesman who served as the eighth president of the United States from 1837 to 1841. A primary founder of the Democratic Party (Uni ...
and Walter Lowrie. But the bill became law on March 31, 1821. A year was allowed to liquidate the operations. Benton managed to pass a supplementary bill that prevented the current officeholders from taking part in the closing down process. George Gorham was subsequently placed in charge of the liquidation of the Office of Indian Trade and the government factories. It was not fully completed until 1830.
List of factories
Government factories were usually situated at military posts. The army aided the factories by ordering soldiers to assist with transporting goods, beating and packing furs and erecting buildings. The Army protected the factories from violence and theft. The military presence enhanced the prestige of the factors in the eyes of the Native Americans.
* Colerain was established 1795 on St. Mary's River, Georgia. It was subsequently moved to
Fort Wilkinson
Fort Wilkinson was a U.S. fort near Milledgeville, Georgia established in 1797 near the Oconee River. It supplanted Fort Fidius. A historical marker commemorates the site. The fort carried out trading relations with Creek people, Creek peoples thr ...
in 1797, to
Ocmulgee Old Fields
The Ocmulgee River () is a western tributary of the Altamaha River, approximately 255 mi (410 km) long, in the U.S. state of Georgia (U.S. state), Georgia. It is the westernmost major tributary of the Altamaha.Fort Hawkins 1808, and to Fort Mitchell 1817 before being closed down in 1821.Wesley 1935, pp. 35, 38.
* Tellico, in what is now eastern Tennessee, was established in 1795. In 1807 it was moved a few miles south to Hiawassee before being discontinued in 1811.
* The factory at
Fort Wayne
Fort Wayne is a city in and the county seat of Allen County, Indiana, United States. Located in northeastern Indiana, the city is west of the Ohio border and south of the Michigan border. The city's population was 263,886 as of the 2020 Censu ...
was established in 1802. It was burned by the local Native Americans at the beginning of the
War of 1812
The War of 1812 (18 June 1812 – 17 February 1815) was fought by the United States of America and its indigenous allies against the United Kingdom and its allies in British North America, with limited participation by Spain in Florida. It bega ...
.Wesley 1935, p. 38.
*
Detroit
Detroit ( , ; , ) is the largest city in the U.S. state of Michigan. It is also the largest U.S. city on the United States–Canada border, and the seat of government of Wayne County. The City of Detroit had a population of 639,111 at th ...
was established in 1802 and closed down in 1805.
*
Chickasaw Bluffs
The Chickasaw Bluff is the high ground rising about above the Mississippi River flood plain between Fulton in Lauderdale County, Tennessee and Memphis in Shelby County, Tennessee.
This elevation, shaped as four bluffs, is named for the Chick ...
Tombigbee River
The Tombigbee River is a tributary of the Mobile River, approximately 200 mi (325 km) long, in the U.S. states of Mississippi and Alabama. Together with the Alabama, it merges to form the short Mobile River before the latter empties int ...
was established in 1802 and removed to Fort Confederation in 1817.Wesley 1935, pp. 38, 40.
*
Chicago
(''City in a Garden''); I Will
, image_map =
, map_caption = Interactive Map of Chicago
, coordinates =
, coordinates_footnotes =
, subdivision_type = Country
, subdivision_name ...
Sandusky, Ohio
Sandusky ( ) is a city in and the county seat of Erie County, Ohio, Erie County, Ohio, United States. Situated along the shores of Lake Erie in the northern part of the state, Sandusky is located roughly midway between Toledo, Ohio, Toledo ( wes ...
in 1806, lost 1812 at the beginning of the war.
*
Fort Madison
Fort Madison is a city and a county seat of Lee County, Iowa, United States along with Keokuk. Of Iowa's 99 counties, Lee County is the only one with two county seats. The population was 10,270 at the time of the 2020 census. Located along the ...
, Iowa was established in 1808, but burned down in 1812 by order of the military commander who feared that it would endanger the military post.
* Mackinac was established in 1808, and taken by the British in 1812.
*
Fort Osage
Fort Osage (also known as Fort Clark or Fort Sibley) was an early 19th-century factory trading post run by the United States Government in western Missouri on the American frontier; it was located in present-day Sibley, Missouri. The Treaty o ...
Fort Armstrong
A fortification is a military construction or building designed for the defense of territories in warfare, and is also used to establish rule in a region during peacetime. The term is derived from Latin ''fortis'' ("strong") and ''facere'' ...
in 1822.Wesley 1935, p. 41.
*
Prairie du Chien
Prairie du Chien () is a city in and the county seat of Crawford County, Wisconsin, United States. The population was 5,506 at the 2020 census. Its ZIP Code is 53821.
Often referred to as Wisconsin's second oldest city, Prairie du Chien was esta ...