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Raid or Trade? An Economic Model of Indian-White Relations
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... 21 However, as European populations grew during the eighteenth and nineteenth centuries, these social distance-reduction mechanisms became less effective and frictions re-emerged (Dickason, 2006). In many areas of North America in which a robust colonial state had emerged and evolved, raiding the First Nations was preferred to trading with them (Anderson & McChesney, 1994;Gregg & Wishart, 2012;Candela & Geloso, 2021). However, in areas marked by a weak state presence, European population growth merely changed the type of cultural goods to be produced. ...
... 37 The existence of a state often generated credible commitment problems as well, leading to lower levels of cooperation between groups. Relationships between First Nations and colonists were never more acrimonious than when formal institutions did exist (Anderson & McChesney, 1994;Anderson & Hill, 2004;Candela & Geloso, 2021). When the Virginian's invited Powhatan leaders for peace parley in 1623, for instance, they murdered 500 of them and shot 50 more before taking many of their scalps with them. ...
... In fact, from the perspective of the settlers, there were very few incentives to make any effort at all. Indeed, colonists could secure wealth through raiding rather than trading (Roback, 1992;Anderson & McChesney, 1994;Candela & Geloso, 2021) thanks to the fact that the settlers on the borderlands represented concentrated interest groups whose preferred policies (e.g., expulsion of First Nations) had their costs dispersed over a broader population. British and French troops were frequently sent to secure settlements against Iroquois claims. ...
The process of ethnogenesis (i.e., the formation of new ethnic groups) is here considered equivalent to the production of “governance goods” in situations where the state is weak or absent. In these cases, the process of ethnogenesis is a response to (1) the problem of social distance between heterogeneous groups which functions as a barrier to trade, and (2) the problem of providing public goods. As an investment in governance, ethnogenesis reduces the costs of trading and cooperating, and expands the scope for specialization. We rely on two examples of peaceful and productive relations between First Nations and European settlers in Canada between the early seventeenth and mid-nineteenth centuries to support our hypothesis. The emergence of “hybrid” cultural groups and identities fostered peaceful relations and facilitated trade in borderland areas in which state rule was virtually nonexistent. It also permitted these new groups to provide key collective goods within their own communities. This, in turn, facilitated international trade (especially in furs). Both of our examples suggest that cultural processes can be endogenous responses aimed at the production of governance.
... The American government's relationship with Native Americans, especially the centuries of effort to eradicate or assimilate Indians into white culture and institutions, also fits within our theoretical framework. Even though Indians had governments, property, and much to trade (Anderson & McChesney, 1994), the US Constitution did not recognize these institutions, thus, institutionalizing a permanent conflict between de jure and de facto constitutions. Indian governance institutions, despite great odds, endured (Lear, 2006). ...
Analysis of revolutions typically focuses on de jure constitutions and how their elite- or mass-led character influences their consequences. De facto constitutions are political and economic rules that people use to govern themselves which may or may not be recognized in the evolving de jure constitution. We argue that the nature of change resulting from revolutions depends on whether the emergent constitutional order recognizes the autonomy of de facto constitutions. We theorize neglect, disregard, and hostility toward de facto constitutions contributes to cycles of constitutional instability. We use this theory to explain Afghanistan’s unending revolution. Neither elite-led nor mass-led revolutions in Afghanistan produced a lasting constitutional order because they share a disregard for the de facto constitution.
... Accordingly, Tribe B's opportunity cost of violently encroaching on Tribe A is relatively low, while Tribe A's opportunity cost of defending itself is relatively high. Tribe B has a comparative advantage in violence, and this is true even if Tribe A is absolutely more powerful (Johnsen, 1986;Anderson & McChesney, 1994). Because Tribe A is more productive, it might be absolutely stronger and could prevail in an all-out war if necessary. ...
Among the Pacific Northwest Coast Indians of North America before and during the extended era of European contact, a pervasive institution known as the potlatch governed human relations through reciprocity rather than the hierarchical state. Potlatching involved recurring intertribal feasting, gift giving, ceremonial dance, storytelling, oratory, dispute resolution, declarations of claim or right, and some measure of property destruction. The tribes referred to this network of publicly declared favors given and owed and promises made and received as their customary “potlatch law.” Like law in the Western world, it was the foundation on which their economies rested. The potlatch memorialized obligations, enforced property rights, insured against risk, promoted knowledge accumulation, supplied investment capital, and served as a system of fractional reserve banking. Beyond that, it was the foundation of the tribes’ unique culture. The potlatch provides fascinating insight into the nuance and power of reciprocity in ordering human relations.
... Some tribes and bands mounted stiff resistance to their concentration on reservations. A series of Indian Wars, at their most intense between 1860 and 1890, ensued (Anderson & McChesney, 1994). Assimilation policy was further pushed aside as federal efforts were focused on isolating tribes and protecting settlers. ...
Throughout the nineteenth century, federal Indian policy oscillated between two extreme positions: assimilation versus isolation. While scholars have often been interested in the impact of past federal policy on current levels of economic development among American Indian tribes, none have explicitly examined the influence of federal assimilation policy on long-run economic development. In this paper, I take advantage of tribal-level variation in the application of federal policies to estimate the effect of assimilation on long-run economic performance. To quantify the impact of such policies, I introduce a novel measure of cultural assimilation: the prevalence of traditional indigenous names relative to common American first names. To calculate the distribution of name types, I have gathered the names and locations for all American Indians enumerated in the 1900 United States census. After classifying each name, I calculated the reservation-specific share of non-indigenous names. I estimate the relationship between cultural assimilation in 1900 and per capita income from 1970 through 2020. I find that historical levels of assimilation are consistently associated with higher levels of per capita income in all census years. The results are robust to the inclusion of a variety of cultural and institutional controls and regional fixed effects.
... The US reservation system was a result of military conflict between Indian nations and the US government fueled by the westward expansion and increasing land dispossession in the nineteenth century. The pace of reservation formation was slow while military power was balanced, but it accelerated rapidly once the invention of the Hotchkiss gun tipped military technology irrevocably in the US government's favor, culminating in the tragic 1890 Wounded Knee Massacre (Anderson & McChesney, 1994). By that point, the "Indian problem" had fundamentally changed in nature, from a military one to an administrative one centered on what to do with the reservation system then in place. ...
From 1887 to 1934, the federal government broke up millions of acres of tribally owned reservation lands and allotted them to individual Native American households. The Bureau of Indian Affairs’ local “Indian agents” oversaw this highly contingent conveyance of property rights. They initially managed the allotted land held in trust, and then later decided when and if to re-title it to fee simple. Building on and going beyond the literature showing that bureaucratic incentives matter greatly for policy implementation, our paper studies empirically to what extent individual agents’ idiosyncratic preferences and discretion shaped this process. We find that individual agents were statistically important drivers of policy implementation, introducing an element of historical randomness into the legacy of allotment, which continues to shape the distribution of land titles on reservations to the present day.
This paper analyzes the impact of FORIS contracts on litigation and settlement decisions using a simple divergent-expectations model. A FORIS contract introduces contingent fee arrangements under the British legal cost allocation rule: the plaintiff pays a percentage of his settlement or trial returns to FORIS and obtains coverage for trial costs in case he loses in court; the plaintiff?s attorney receives the standard fee. We take into account the sequential nature of the settlement and trial decisions. Without FORIS contracts, only cases with positive expected value provide credible threats for the plaintiff and thereby motivate the defendant to agree to a settlement. A FORIS contract has two important effects: cases with negative expected value are turned into credible threats, hence a settlement is triggered. Even in positive expected value cases, the settlement result for the plaintiff is increased. According to our results, FORIS should prohibit settlement negotiations before a contract with the plaintiff has been made. The paper argues that FORIS should abolish the non-disclosure clause which prohibits the plaintiff to reveal the existence of the FORIS contract to a third party. -- Das Paper analysiert die Wirkung eines FORIS-Vertrages auf die Bereitschaft zu klagen und zum au�ergerichtlichen Vergleich. Dabei wird ein einfaches Optimismus-Modell angewendet. Der FORIS-Vetrag erlaubt es dem Kl�ger, trotz Geltung der Europ�ischen Proze�kostenregel (Velierer zahlt) mit den (in Amerika �blichen) "contingent fees" kalkulieren zu k�nnen: Der Kl�ger zahlt einen Teil seiner Ertr�ge aus Proze� oder Vergleich an FORIS; diese Firma wiederum zahlt die gesetzlichen Geb�hren an den Anwalt des Kl�gers und tr�gt die Proze�kosten, wenn der Kunde unterliegt. Das Modell zieht die sequentielle Struktur von Vergleichs- und Proze�entscheidungen in Betracht. Ohne FORIS-Vertrag w�re eine Klagedrohung nur dann glaubw�rdig, wenn der Proze� dem Kl�ger einen p