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An Economic Analysis of Indian Behavior in the North American Fur Trade

Published online by Cambridge University Press:  11 May 2010

John C. McManus
John C. McManus
Affiliation:
Carleton University
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Extract

This study of Indian behavior in the fur trade is offered more as a report of a study in progress than a completed piece of historical research. In fact, the research has barely begun. But in spite of its unfinished state, the tentative results of the work I have done to this point may be of some interest as an illustration of the way in which the recent revival of analytical interest in institutions may be used to develop an approach to the economic history of the fur trade.

Type
Papers Presented at the Thirty-first Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 32 , Issue 1 , March 1972 , pp. 36 - 53
Copyright
Copyright © The Economic History Association 1972

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References

1 Recent examples may be found in such work as Cheung, Steven N. S., The Theory of Share Tenancy (Chicago: University of Chicago Press, 1969)Google Scholar; Alchian, Armen and Kessel, Reuben, “Competition, Monopoly, and the Pursuit of Pecuniary Gain,” in Aspects of Labor Economics, NBER (Princeton: Princeton University Press, 1962), pp. 156–75Google Scholar; Buchanan, James M. and Tullock, Gordon, The Calculus of Consent (Ann Arbor: University of Michigan Press, 1962)CrossRefGoogle Scholar; and Arrow, Kenneth J., “Political and Economic Evaluation of Social Effects and Externalities” in Margolis, J. (ed.) The Analysis of Public Output, NBER (New York: NBER, 1970), pp. 1–23.Google Scholar

2 I will use the terms “efficient” and “inefficient” to apply to the Pareto condition exclusive of the costs of transacting so that the existence of allocative “inefficiency” does not necessarily imply that someone can be made better off without making anyone else worse off. The costs of effecting a more efficient allocation of resources may be higher than the gains.

3 Arrow, K. J., “The Organization of Economic Activity: Issues Pertinent to the Choice of Market vs. Non-market Allocation,” in United States, 91st Congress, Joint Economic Committee, The Analysis and Evaluation of Public Expenditures, I (Washington, G.P.O., 1969), 41–63.Google Scholar

4 Coase, R. H., “The Problem of Social Cost,” Journal of Law and Economics, III (1960), 1–44.CrossRefGoogle Scholar

5 Cheung, Steven N. S., “Transaction Costs, Risk Aversion, and the Choice of Contractual Arrangements,” Journal of Law and Economics, XII (1969), 23–42.Google Scholar

6 Williamson, Oliver E., The Economics of Discretionary Behavior: Managerial Objectives in a Theory of the Firm (Chicago: Markham, 1967)Google Scholar, and McManus, John C., “The Organization of Production,” Ph.D. thesis (University of Toronto, 1971).Google Scholar

7 Innis, H. A., The Fur Trade in Canada (Toronto: University.of Toronto Press, 1956), pp. 5, 6Google Scholar; and Rich, E. E., “Trade Habits and Economic Motivation Among the Indians of North America,” Canadian Journal of Economics and Political Science, XXVI (1960), 46.Google Scholar

8 Landes, Ruth, “The Ojibwa of Canada,” in Mead, M. (ed.), Cooperation and Competition Among Primitive Peoples (New York: McGraw-Hill, 1937), pp. 57–126Google Scholar; Speck, F. G., “Family Hunting Territories and Social Life of Various Algonkian Bands of the Ottawa Valley,” in Canada, Department of Mines, Geological Surveys, Memoir 70 (Ottawa, 1915)Google Scholar; and Speck, F. G., “Family Hunting Territories of the Lake St. John Montagnais and Neighboring Bands,” Anthropos, XXII (1927), 387–403.Google Scholar I was introduced to some of this literature and became interested in the problem of explaining the depletion of beaver populations in reading Demsetz, Harold, “Toward a Theory of Property Rights,” American Economic Review, LVII (1967), 350–53.Google Scholar Demsetz's reading of Leacock, Eleanor, “The Montagnais ‘Hunting Territory’ and the Fur Trade,” American Anthropologist, LVI, 5 (1954)Google Scholar, part 2, Memoir #73 suggested to him that the family hunting territories were a case in which private property rights emerged when the costs of enforcement became less than the gains from exclusion as the value of beaver fur increased.

9 Speck, “Family Hunting Territories of the Lake St. John …,” p. 388; and Hallowell, A. J., “The Size of the Algonkian Hunting Territories: A Function of Ecological Adjustment,” American Anthropologist, LI (1949), 35–45.CrossRefGoogle Scholar

10 The argument among anthropologists regarding the question of whether the establishment of family hunting territories was pre-Columbian has not been resolved. See Speck, F. G. and Eiseley, Loren C., “Significance of Hunting Territory Systems of the Algonkian in Social Theory,” American Anthropologist, XLI (1939), 269–80CrossRefGoogle Scholar; and Leacock, “The Montagnais ‘Hunting Territory’….”

11 Gordon, Scott, “The Economics of a Common Property Resource, the Fishery,” Journal of Political Economy, LXII (1954), 124–42CrossRefGoogle Scholar; and Cheung, Steven N. S., “The Structure of a Contract and the Theory of a Non-exclusive Resource,” Journal of Law and Economics, XIII (1970), 49–70.Google Scholar

12 Voorhis, Ernest, Historic Forts and Trading Posts of the French Regime and of the English Fur Trading Companies (Ottawa: Department of the Interior, 1930)Google Scholar lists twelve trading posts in this area that operated continuously through the 19th century.

13 Innis, The Fur Trade in Canada, pp. 264–65.

14 This description of Montagnais and Naskapi life is based on Leacock, “The Montagnais ‘Hunting Territory’ …;” and Lips, Julius E., Naskapi Law, Transactions of the American Philosophical Society, n.s. XXXVII, part 4 (1947), 379–492.Google Scholar

15 Provision of credit to Indian hunters was universally practiced by traders.

16 Innis, The Fur Trade in Canada, pp. 334–35.

17 The locations of posts are mapped in Voorhis, Historic Forts …, end.

18 Speck, F. G., “Mistassini Hunting Territories in the Labrador Peninsula,” American Anthropologist, XXV (1923), 460Google Scholar, and in Lips, Naskapi Law, p. 433.

19 Lips, Naskapi Law, p. 429, 433.

20 Ibid.

21 Lips, Naskapi Law, describes a few instances of trespass and, in each case, no effort to punish or exclude the trespasser appears to have been made. See also Speck, “Family Hunting Territories of the Lake St. John …,” p. 390.

22 Bailey, V., Beaver Habits, Beaver Control, and Possibilities in Beaver Farming, United States, Department of Agriculture, Bulletin #1078 (Washington: G.P.O., 1922).CrossRefGoogle Scholar

23 Elton, C., Voles, Mice and Lemmings (Oxford: The Clarendon Press, 1942), Part III, pp. 234–338.Google Scholar

24 Bailey, Beaver Habits …. p. 9; and Innis, The Fur Trade in Canada, p. 4.

25 Bailey, Beaver Habits …, pp. 17–19; and Denmark, D. E., “James Bay Beaver Conservation,” The Beaver, Outfit 279 (Sept., 1948), pp. 38–43.Google Scholar

26 Wallace, W. S. (ed.), John MacLean's Notes of Twenty-five Year's Service in the Hudson's Bay Territory (Toronto: The Champlain Society, 1932), p. 353.Google Scholar

27 See the post reports reproduced in Lips, Naskapi Law.

28 Davies, R. G. (ed.), Northern Quebec and Labrador Journals and Correspondence, 1819–35, XXIV (London: Hudson's Bay Record Society, 1963), pp. 291–92.Google Scholar

29 Some estimates of fur returns are available in Elton, Voles, Mice and Lemmings. It may be possible to develop a reasonable estimate of beaver populations through the 19th century from the fur returns of the trading posts of the Hudson's Bay Company, which are available in the Company's archives. I have not yet had the opportunity to examine these records.

30 Fleming, R. H. (ed.), Minutes of Council, Northern Department of Rupert Land 1821–31, III (London: Hudson's Bay Record Society, 1940), pp. xix, lxxiii.Google Scholar

31 Ibid., p. xxv.

32 Wallace, John MacLean's Notes …, p. 353, and Innis, The Fur Trade in Canada, p. 334.

33 Denmark, “James Bay Beaver Conservation,” pp. 38–9.

34 This assumes no resource cost to investments in raising the population of beaver. Since the beaver constructs his own environment, the assumption is appropriate except that it ignores the increase in the average cost of hunting furs that the Indian would experience if he were to take the same total number of furs from more houses, thus leaving more beavers to reproduce in each of the houses in his territory. The hunter would minimize his present costs by taking a given number of pelts from the minimum number of houses. In the absence of any information on this component of the costs of conservation, I have ignored it in this discussion.

35 Demsetz, “Toward a Theory of Property Rights,” did not test the empirical implications of his assertion that Indians established private property rights in beaver resources.

36 In the following discussion, I rely heavily upon the anthropological studies cited below. These studies are essentially descriptive and the authors rely, for the most part, on interviews with selected informants drawn from the band. The questions tend to be wide ranging, and the evidence is sometimes contradictory. For example, Lips, Naskapi Law, on p. 389 reports that “the Naskapi culture knows of division of labour almost exclusively as between the sexes,” and on p. 442, “Among the Mistassini, for instance, Robert Moar, the father of Tommy Moar, was a preferred canoe builder, while Maggy Moar's beadwork was considered so outstanding that other members of the band ordered boats or needlework from them for which they paid either with money or with bartered goods.” To avoid spurious reports, I have tried to confine this paper to evidence that can be found in two or more independent studies. Limitations of time and space prevent me from attempting to fully qualify empirical observations on which the analysis is based.

37 Speck, “Family Hunting Territories of the Lake St. John ….”

38 Leacock, “The Montagnais ‘Hunting Territory’ …,” p. 21; and Lips, Naskapi Law, pp. 399–402.

39 Speck, “Family Hunting Territories of the Lake St. John …,” pp. 398–403; Speck, “Mistassini Hunting Territories …,” pp. 468, 471; and Leacock, Ibid., p. 20.

40 Leacock, Ibid., p. 2. This source also notes that “owners” of hunting territories did not have the right to alienate their rights to take beaver furs.

41 Ibid.; and Lips, Naskapi Law, p. 443.

42 Leacock, “The Montagnais ‘Hunting Territory’ …,” p. 34.

43 Ibid., p. 438.

44 Ibid., p. 471.

45 Ibid., p. 433; for similar observations see Speck, “Family Hunting Territories of the Lake St. John …,” p. 390, and Leacock, “The Montagnais ‘Hunting Territory’ …,” pp. 32–4.

46 Ibid., p. 485.

47 Speck, “Family Hunting Territories of the Lake St. John …,” p. 388; and Hallowell, “The Size of the Algonkian …,” passim.

48 Lips, Naikapi Law, p. 404; Leacock, “The Montagnais ‘Hunting Territory’ …,” p. 33; and Wallace, John MacLean's Notes …, pp. 110, 264.

49 Wallace, John MacLean's Notes …, p. 15; Hudson's Bay Company records frequently report desertion by Indians contracted to provide a service for a period of time; and Lips, Naskapi Law, p. 441.

50 E. E. Bach, “Trade Habits …,” pp. 44, 46: “But although the Indians were so long habituated to their business, and so shrewd in their conduct of it, they were not logical in their reactions … the steady refusal to regard oatmeal as a necessity despite the endless instances of the need to fall back on it may, of course, be taken as just another example of the improvidence of the Indian. It certainly was that … it meant that the Indian did not react to the ordinary European notions of property nor to the normal European economic motives.”