The system of public trading houses goes back to colonial days. At first
in Plymouth and Jamestown all industry was controlled by the
commonwealth, and in Massachusetts Bay the stock company had reserved
the trade in furs for themselves before leaving England.[207] The trade
was frequently farmed out, but public "truck houses" were established by
the latter colony as early as 1694-5.[208] Franklin, in his public
dealings with the Ohio Indians, saw the importance of regulation of the
trade, and in 1753 he wrote asking James Bowdoin of Massachusetts to
procure him a copy of the truckhouse law of that colony, saying that if
it had proved to work well he thought of proposing it for
Pennsylvania.[209] The reply of Bowdoin showed that Massachusetts
furnished goods to the Indians at wholesale prices and so drove out the
French and the private traders. In 1757 Virginia adopted the system for
a time,[210] and in 1776 the Continental Congress accepted a plan
presented by a committee of which Franklin was a member,[211] whereby
£140,000 sterling was expended at the charge of the United Colonies for
Indian goods to be sold at moderate prices by factors of the
congressional commissioners.[212] The bearing of this act upon the
governmental powers of the Congress is worth noting.
In his messages of 1791 and 1792 President Washington urged the need of
promoting and regulating commerce with the Indians, and in 1793 he
advocated government trading houses. Pickering, of Massachusetts, who
was his Secretary of War with the management of Indian affairs, may have
strengthened Washington in this design, for he was much interested in
Indian improvement, but Washington's own experience had shown him the
desirability of some such plan, and he had written to this effect as
early as 1783.[213] The objects of Congressional policy in dealing with
the Indians were stated by speakers in 1794 as follows:[214] 1.
Protection of the frontiersmen from the Indians, by means of the army.
2. Protection of the Indians from the frontiersmen, by laws regulating
settlement. 3. Detachment of the Indians from foreign influence, by
trading houses where goods could be got cheaply. In 1795 a small
appropriation was made for trying the experiment of public trading
houses,[215] and in 1796, the same year that the British evacuated the
posts, the law which established the system was passed.[216] It was to
be temporary, but by re-enactments with alterations it was prolonged
until 1822, new posts being added from time to time. In substance the
laws provided a certain capital for the Indian trade, the goods to be
sold by salaried United States factors, at posts in the Indian country,
at such rates as would protect the savage from the extortions of the
individual trader, whose actions sometimes provoked hostilities, and
would supplant British influence over the Indian. At the same time it
was required that the capital stock should not be diminished. In the
course of the debate over the law in 1796 considerable _laissez faire_
sentiment was called out against the government's becoming a trader,
notwithstanding that the purpose of the bill was benevolence and
political advantage rather than financial gain.[217] President Jefferson
and Secretary Calhoun were friends of the system.[218] It was a failure,
however, and under the attacks of Senator Benton, the Indian agents and
the American Fur Company, it was brought to an end in 1822. The causes
of its failure were chiefly these:[219] The private trader went to the
hunting grounds of the savages, while the government's posts were fixed.
The private traders gave credit to the Indians, which the government did
not.[220] The private trader understood the Indians, was related to them
by marriage, and was energetic and not over-scrupulous. The government
trader was a salaried agent not trained to the work. The private trader
sold whiskey and the government did not. The British trader's goods were
better than those of the government. The best business principles were
not always followed by the superintendent. The system was far from
effecting its object, for the Northwestern Indians had been accustomed
to receive presents from the British authorities, and had small respect
for a government that traded. Upon Wisconsin trade from 1814 to 1822 its
influence was slight.