Engines of Diplomacy: Indian Trading Factories and the Negotiation of American Empire by David Andrew Nichols (review)

For more than a century, historians assessing the federal government's system of Indian trading posts, or factories, seemed to take their lead from Senator Thomas Hart Benton of Missouri. Benton, representing powerful private trading interests, had railed against the government factories. Their goods were shoddy, he insisted, and their impact on Indian policy and diplomacy negligible. Yet, David Nichols revisits the obvious, but important question: if the factory system was so comically inept and ineffectual, how did it survive for three decades until finally eliminated by Congress in 1822? Nichols concludes that the end of the factory system had far more to do with politics than with performance.

While George Washington and Thomas Jefferson had a great many policy disagreements, both the federalist Washington and the father of American republicanism agreed that Indian factories could prove highly beneficial to the young nation. In particular, they served as a cost-effective means to shape Indian-white relations and squeeze out the (presumably) pernicious influences of British or Spanish agents. These factories served as "engines of diplomacy," according to Nichols. Native American views regarding trade as an act of reciprocity with sociopolitical implications actually dovetailed nicely with U.S. leaders' hopes of peace and prosperity through commerce. While the United States had spent an unsustainable level of blood and treasure in the Ohio Valley in the early 1790s, "over $2.5 million and 1,200 casualties," trade proved far more cost effective and peaceful in promoting American interests (p. 4). Although penny-pinching Jeffersonians slashed away at many Federalist programs, they actually expanded the Indian factories "into a national system" (p. 44). This system provided for imperial conquest without violence, even in bloody times.

The American government saw numerous advantages, both commercial and imperial, to the trading houses. Native leaders used them to their own benefit as well. They expected, even demanded, hospitality from factories and would run up considerable debts (which they might or might not repay) to redistribute goods to their people. They were also quite direct in suggesting/insisting upon the location of factories. White authorities saw an opportunity to establish a trade monopoly and to push the "civilization" agenda, but Native Americans welcomed the access to consumer goods for their own designs.

The Napoleonic Wars and the War of 1812 dealt a mighty blow to the fur trade, and two events in 1819 ultimately proved fatal to the factory system. First, a massive economic depression almost wiped out American bankers, encouraging serious government retrenchment across the board, including half the budget for the Navy and the Indian Department. Second, Congress passed the Civilization Act of 1819, which allocated federal monies to promote missionaries and the formal education of Native children. The idea had come from Indian trade superintendent Thomas McKenney, but the wording of the law cut his factories off from its funding and implementation. Though McKenney protested mightily, the Indian factories were increasingly viewed as irrelevant, thanks largely to the economy and the lobbying of powerful private trading companies. Combined with the War of 1812's demonstration that Indians east of the Mississippi could "no longer credibly maintain independence from American rule," the factory system seemed passé (p. 168).

With respect to economic historians, Engines of Diplomacy is much more interesting than a book about retailing and wholesaling has any right to be. This is due to Nichols's lively prose and deft integration of economic, political, military, and Native histories into a smart, compelling story—something he makes look far easier than it undoubtedly was. This book makes an important contribution to scholarship, but it would work well in upper-division and graduate classrooms as well.