During Elouise Cobell’s campaign against federal management of Indian trust accounts, she learned that the U.S. did all sorts of things with the money. In the 1970s, for example, trust funds went to bailing out New York City and the Chrysler Company. Meanwhile, Native beneficiaries of the accounts couldn’t get payouts to rebuild destroyed homes or care for ill loved ones. And the records of who the accounts belonged to and what should be in them were out-of-date, kept in garbage bags and dilapidated boxes, destroyed by water and gnawed by rodents.
The history of federal Indian trust funds might be seen as simply another example of bureaucratic mismanagement and lack of concern for Indigenous property. But Emilie Connolly’s research shows that it is something more. In, Fiduciary Colonialism: Annuities and Native Dispossession in the Early United States, Professor Connolly examines the early history of such trust accounts to show that their creation and management was itself a tool of colonial domination. By holding and gradually paying out moneys owed to tribes, the United States could achieve expropriation without expensive wars, encourage tribal dependence, and invest the funds to finance further dispossession. As Connolly writes, “[a]nnuities and trust funds anchored . . . a mode of territorial acquisition and population management carried out through the expansion of administrative control over Native peoples’ wealth.” (P. 227.)
The United States began regular distributions to tribal nations in its founding years. Often promised perpetually to tribal treaty partners, these “annuities” borrowed from the pre-contact gift diplomacy through which Algonquian and Iroquoian peoples forged relationships of tribute and alliance. Indigenous recipients rejected the idea that these were payments for land cessions; they reflected obligations between allies, not compensation for territory. But even without agreement on their meaning, these distributions served U.S. goals by encouraging allegiance, undermining trade relationships with England and Spain, and introducing “civilizing” goods such as plows, spinning wheels, and European clothing into Indigenous communities.
After the war of 1812, annuities became more clearly tied to land cessions. Their amount increased and their nature changed: they were paid in cash rather than goods, and metal hard money–“specie”—rather than paper money. The shift to specie was significantly at Indigenous insistence, and tribal nations used it to buy livestock and build infrastructure that enriched the wealth of their communities. In the wake of the devastating removals west of the Mississippi beginning in the 1820s, tribes used annuity payments to rebuild, financing education and agriculture, health care and orphanages.
But annuities enriched others as well. At a time that hard money was more valuable and far rarer than regional paper currency, annuity distributions “became prizes, founts of high-powered money fought over by rival officials and local stakeholders.” (P. 241.) Federal Indian agents would lend out the specie under their control, pocketing the interest. Traders swarmed disbursement sites, receiving specie in exchange for goods and demanding it in exchange for debts they claimed tribes had incurred. The influx of cash also fueled frontier communities, encouraging settler migration to Indigenous homelands.
Fiduciary colonialism’s most perverse impact was in using tribal funds to finance tribal dispossession. Compensating tribal nations for land cessions by annuities rather than lump sum payment meant that the United States could acquire the land well before paying for it. Instead, it could sell the land to speculators and settlers, and use their payments (often far more than promised to tribes) to fund the annuity. And once the fund was in place, the United States could “invest” it in ventures of its own. Often these investments were in state issued bond funds used to build infrastructure, such as canals, railroads, and roads, that accelerated settler expansion. Feverish state borrowing led the state bond market to collapse in 1839, leaving states deeply in debt to tribal trust funds. Reflecting the value of obtaining Indigenous land by money rather than war, the federal government made up the shortfall itself.
Control over tribal funds also gave the U.S. crucial leverage over tribal people. The federal government used threats to terminate annuities to secure land cession treaties and extralegal dispossession. In later years, agents would withhold annuities from individual tribe members who refused to send their children to boarding school or otherwise participate in civilization schemes. And although the federal government had created annuities for its own purposes, it used these disbursements to portray Native people as dependent and in need of supervision. Forgetting that the funds represented Native property owed in compensation for Native land, the U.S. condemned the funds’ beneficiaries for wanting what they were owed.
Fiduciary Colonialism opens a window on the modes and means of colonial expropriation. It sheds new light on the federal government’s “trust relationship” with Indigenous peoples, revealing the origins of federal control in management of tribal moneys rather than tribal lands or welfare. Given this origin, the $176 billion that Cobell’s attorneys found had been misappropriated from trust funds is less surprising. Federal control of Native money was never designed to benefit Native people, but instead to benefit those who sought to displace them.
