Investigating the Rise and Fall of Indian Trading Houses, 1795–1822

Between 1795 and 1822, the United States government established and operated a series of Indian trading houses (or "government factories") on the western frontier. These trading houses purchased pelts and other items at fair market price from Natives and sold domestic and imported products to them for cost. The belief was that these trading houses would counteract the fraudulent practices pursed by private traders (both foreign and domestic) on the frontier, tie the Natives into closer relations with the United States (as agents of Spain and Britain lurked nearby), and ultimately enable greater Indian land sales to the United States. The trading houses showed some successes over their lifespan, but they ran afoul of private traders who viewed them as unwanted competition. Eventually, following the Panic of 1819 and succeeding depression, the enemies of the trading houses were successful in lobbying Congress for their abolition. This paper examines the factors behind the rise and fall of Indian trading houses from the perspective of the president and Congress, via a legislative policy history that incorporates all key proceedings and roll-call votes.