Mancall, P. C., J. L. Rosenbloom,
et al. (2002). The Economic Activity of
(Comments: Reads fast due to large number of footnotes and end tables.)
The other excerpts on this guide from Carlos and Lewis and Hardin reflect a very different perspective. These concern the impact of economic and legal structures on a trading relationship. Clearly different rules will have different results. These are an interesting example of how economic historians have approached a problem. You should consider the following questions:
Indian Population , 1500-1800
Source: Mancall, Rosenbloom, et al (2002)
Frank D. Lewis. 2001. "Trade, Consumption,
the Native Economy: Lessons from
Like Europeans and colonists, eighteenth-century Native Americans were purchasing a greatly expanded variety of goods. As fur prices rose from 1716 to 1770, there was a shift in expenditures from producer and household goods to tobacco, alcohol, and other luxuries by Indians who traded furs at the Hudson's Bay Company's York Factory post. A consumer behavior model, using company accounts, shows that Indians bought more European goods in response to higher fur prices and, perhaps more importantly, increased their effort in the fur trade. These findings contradict much that has been written about Indians as producers and consumers.
A. M. and
F. D. Lewis (1999). "Property Rights,
and Depletion in the Eighteenth-Century Fur Trade: The Role of the
trade in Canadian beaver was based on European demand.
were shipped from
“Historians have long been aware that it was the actions of Indians that directly led to depletion, but recently the question has become: Why did Native peoples not conserve the fur-bearing animals on which their livelihood was based?”
“In this paper we explore the forces that discouraged conservation by Native peoples and European trading companies. An important influence was the rising demand for furs in Europe.4 We interpret the impact of this European demand by deriving the Hudson's Bay Company's long-run, profit-maximizing, strategies, where the company is treated as a price taker in the European market. Our theoretical results argue that at trading posts, where the company was a monopsonist, its optimal strategy was to set prices roughly consistent with a maximum sustained
beaver population. The European market
would thus have
little impact on the North American price. But
presence of French traders, which we treat as a competitive fringe to
“In a now famous paper, Harold Demsetz (1967) argued that formal property rights would emerge if the benefits of such rights exceeded the costs. Citing the work of Eleanor Leacock (1954), Demsetz pointed out that some Indian groups established well-defined property rights when the commercial fur trade was introduced and thus
their level of resource extraction. He
particular, the actions of the Montagnais in
“Central to our
story of depletion is evidence that
Indians responded with increased harvests when they received a higher
furs, regardless of the effect on the beaver population. But
why did the Indians not take a longer-run perspective and control their
activities? A variety of factors seem have
play. Indian custom regarding the right to
food and other aspects of their `Good Samaritan' principle mitigated
the emergence of strong trespass laws and property rights in
animals; conflict in the areas around the Hudson Bay hinterland
an environment that was not conducive to secure tenure, and attitudes
generosity and even a belief in reincarnation may have played a role. For these reasons the Indians apparently
beaver as an open access resource, and, as a result, high prices led to
harvesting rates. In the regions served by
Hardin, Garrett, 1968. 'The Tragedy of the Commons,' Science, 162, 1243-1248. Available online at various locations, including: http://mason.gmu.edu/~rjonas/Tragedy01.htm
“The tragedy of the commons develops in this way. Picture a pasture open to all. It is to be expected that each herdsman will try to keep as many cattle as possible on the commons. Such an arrangement may work reasonably satisfactorily for centuries because tribal wars, poaching, and disease keep the numbers of both man and beast well below the carrying capacity of the land. Finally, however, comes the day of reckoning, that is, the day when the long-desired goal of social stability becomes a reality. At this point, the inherent logic of the commons remorselessly generates tragedy.
As a rational being, each herdsman seeks to maximize his gain. Explicitly or implicitly, more or less consciously, he asks, "What is the utility to me of adding one more animal to my herd?" This utility has one negative and one positive component.
1. The positive component is a function of the increment of one animal. Since the herdsman receives all the proceeds from the sale of the additional animal, the positive utility is nearly + 1.
2. The negative component is a function of the additional overgrazing created by one more animal. Since, however, the effects of overgrazing are shared by all the herdsmen, the negative utility for any particular decisionmaking herdsman is only a fraction of - 1.
Adding together the component partial utilities, the rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another.... But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit -- in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all.” Hardin, Garrett, 1968. 'The Tragedy of the Commons,' Science, 162, 1243-1248. Available online at various locations, including: http://mason.gmu.edu/~rjonas/Tragedy01.htm
Cronon, W. (1983). Changes in the Land: Indians,
Colonists and the
Articles addressing general economic principles of property rights issues:
Demsetz, Harold, 1967. 'Towards a Theory of Property Rights,' American Economic Review, vol. 57,
no. 2, 1967, pp. 347-359.