Chicago and the Old Northwest, 1673-1835 / A study of the evolution of the northwestern frontier, together with a history of Fort Dearborn

by Milo Milton Quaife

MRS. REBEKAH HEALD

From a daguerreotype taken in later life

(By courtesy of Mrs. Lillian Heald Richmond, St. Louis. Missouri)

From the time of its re-establishment in 1816 the factory was conducted at Chicago until the abolition of the government trading-house system in 1822; but the Chicago factory did not acquire during this time the trade and influence enjoyed by the first factory in the period before the War of 1812. The reasons for this failure to recover the old-time influence will be set forth in connection with the consideration of the failure and abolition of the factory system as a whole.

We have seen that the system of government trading houses was entered upon as an experiment, and that as such it was renewed from time to time. Congress never abolished the earlier system of licensed private traders, and never gave a whole-hearted support to the competing system. Herein lay the chief cause of the ultimate failure of the experiment, and here, too, is to be found the principal reason for the limited degree of influence and success achieved by the government trading houses during its continuance. Upon the formation of the American Fur Company by John Jacob Astor, that powerful corporation, operating from Mackinac as a center, undertook to monopolize the Indian trade of the Northwest. There ensued for a few years the most vigorous exploitation of the fur trade which this region ever witnessed. The American Fur Company, in connection with other private traders, was antagonized by the government factory system, and consequently left no stone unturned to overthrow it. Partly because of this, but in part from the operation of other factors, to be noted in their place, the trade of the Chicago and Green Bay factories largely disappeared prior to 1820; and it had been decided, in fact, to discontinue them and establish a new one on the St. Peter's River when Congress, under the urging of Senator Benton, decided in 1822 to abolish the entire factory system.

The system of government trading houses had been established under the influence of a twofold motive. The primary consideration of the government's Indian policy was the maintenance of peace on the frontier. This could best be accomplished by rendering the Indian contented, and by freeing him from the influence of foreigners. Not merely his happiness, but his very existence depended upon his securing from the whites those articles which he needed but which he himself could not produce; and since the private traders took advantage of his weakness and ignorance to exploit him outrageously in the conduct of the Indian trade, it was argued that the welfare of the Indian would be directly promoted, and indirectly the peace of the frontier be conserved, by the establishment of government trading houses upon the principles that have been indicated.

The theory underlying the government factory system seemed sound, but in practice several obstacles to its successful working, powerful enough in the aggregate to cause its abandonment, were encountered. Not until 1816 was an act passed excluding foreigners from the trade, and even then such exceptions were allowed as to render the prohibition of little value.[766] The amount of money devoted to the factory system was never sufficient to permit its extension to more than a small proportion of the tribes. However well conducted the business may have been, this fact alone would have prevented the attainment of the larger measure of benefit that had been anticipated.

[766] See report of the Committee on Indian Affairs to Congress in 1817, in American State Papers, Indian Affairs, II, 127; Irwin-McKenney correspondence and report of Jedediah Morse in Wisconsin Historical Collections, VII, 269 ff.

Another and inherent cause of failure lay in the difficulty of public operation of a business so special and highly complicated in character as the conduct of the Indian trade. Great shrewdness, intimate knowledge of the native character, and a willingness to endure great privations were among the qualifications essential to its successful prosecution. The private trader was at home with the red man, his livelihood depended upon his exertions, and he was free from the moral restraints which governed the conduct of the government factor. Above all he was his own master, free to adapt his course to the exigencies of the moment; the factor was hampered by regulations prescribed by a superintendent who resided far distant from the western country; and he, in turn, by a Congress which commonly turned a deaf ear to his repeated appeals for amendment of the act governing the conduct of the trade. The factor's income was assured, regardless of the amount of trade he secured; nor was he affected by losses due to errors of judgment on his part, as was the private trader. Too often he had, at the time of his appointment, no acquaintance with the Indian or with the business put in his charge. To instance a single case, Jacob Varnum at the time of his appointment to the Sandusky factory was a native of rural New England, who had neither asked for nor desired such an appointment. It is doubtful whether he had ever seen an Indian, and he was certainly entirely without mercantile experience; yet he had for competitors such men as John Kinzie, Thomas Forsyth, and Antoine De Champs, men who had spent practically their whole lives in the Indian trade.

The goods for the government trade must be bought in the United States, and the peltries secured in its conduct must be sold here. This worked disaster to the enterprise in various ways. From their long experience in supplying the Indian trade the English had become expert in the production of articles suited to the red man's taste. It was impossible for the government, buying in the United States, to match, in quality and in attractiveness to the Indian, the goods of the Canadian trader. Even if English goods were purchased of American importers, the factory system was handicapped by reason of the higher price which must be paid. On the other hand the prohibition against the exportation of peltries compelled the superintendent of the trade to dispose of them in the American market. Experience proved that the domestic demand for peltries, particularly for deer skins, did not equal the supply; so that the restriction frequently occasioned financial loss. But there were further restrictions in the act of 1806 which narrowed the choice of a market even within the United States.[767] That these restrictions would operate to diminish the business, and accordingly the influence of the government trading houses, is obvious.