Review of _ Commerce by a Frozen Sea: Native Americans and the European Fur Trade_

29 11 2010

Title: Commerce by a Frozen Sea: Native Americans and the European Fur Trade Published by EH.NET (November 2010)

Ann M. Carlos and Frank D. Lewis, Commerce by a Frozen Sea: Native Americans and the European Fur Trade.  Philadelphia: University of Pennsylvania Press, 2010. viii + 260 pp. $50 (hardcover), ISBN: 978-0-8122-4231-7.

Reviewed for EH.Net by Peter J. Hill, Department of Business and Economics,
Wheaton College (Illinois).

Some economic histories are valuable because they provide insights into
events and places previously not fully explored, while others contribute
through a well-formulated test of economic propositions. In /Commerce by a
Frozen Sea/, Carlos and Lewis have given us a marvelous melding of the two.
The authors have written a carefully researched and well-organized discussion
of the early fur trade in the very northern reaches of North America as well
as a fascinating use of basic economic theory. The book extends our
understanding of the overall extent of the trade and the interaction between
the European traders — primarily the French and British — and indigenous
tribes.  Europe wanted furs, primarily beaver, and the resident tribal
groups valued the commodities available from the more economically-developed
countries.

When Adam Smith published his /Wealth of Nations/ in 1776, he devoted a bit
more than a page to the Hudson Bay Company, which was over a hundred years
old at that point, having been created by royal charter in 1670. Smith places
his discussion of the Company in his section discussing the costs and
benefits of joint stock companies, and thinks the Hudson Bay Company probably
had a reasonable level of profits, despite some of the principal-agent
problems inherent in such organization.

Smith could have made the Company and its relations with the Native Americans
in the region around Hudson Bay a prime example of one of his basic
assumptions about human nature, “the propensity to truck, barter, and
exchange one thing for another” (Smith, 1937, 13).  He also argued that
the division of labor is limited by the extent of the market  and he would
have found in the activities of the Hudson Bay company a surprisingly robust
case study of entrepreneurial efforts to further extend the market and hence
the division of labor.

/Commerce by a Frozen Sea/ is, at its core, an account of the gains from
trade when two very different cultures with very different resources and
productive abilities come into contact. And that contact itself was not
exogenous, but driven by farsighted individuals who were able to organize
trade across thousands of miles in the most difficult of circumstances. The
Hudson Bay was frozen for most of the year, so the outposts or
“factories” along the edges of the Bay depended upon the yearly vessel
that would bring rations for the Europeans stationed at the factory as well
as trade goods. These goods were often ordered specifically by the Indians
the year before. The ship would then load the furs that had accumulated at
the trading post for the return trip to Europe.

Carlos and Lewis provide useful insights into several issues surrounding
eighteenth-century fur trading. First, the Indians were careful traders and
industrious harvesters of furs and were very sensitive to price fluctuations,
both of the goods they were selling and the commodities (needles, guns, axes,
textiles) that they wanted to receive. There is no evidence that the natives
were an indolent lot, trading to a point of satiation, and then ignoring more
opportunities for exchange. Instead the trade was between two relatively
equal groups and the Indians were careful shoppers who knew what they wanted
and what the relative prices were at French as compared to British trading
posts.

Second, alcohol played little role in the trading patterns. Some natives
traded for alcohol, but their overall consumption was quite modest and the
Hudson Bay Company did not try to use alcohol as a lubricant for trade. In
fact, The Company acted as a firm that cared a great deal about long-term
relations and thought that the use of alcohol during trading created
suspicion and made future trades less likely.

Third, there was little violence in the trading relations. The Hudson Bay
outposts were far apart and had only 20 to 30 men at them. Hence, if the
Native Americans would have wanted to overwhelm a post and plunder the store
of tradable commodities they easily could have done so. They, like the
European traders, however, saw the gains from a long-term relationship and
did not want to jeopardize the possibility of future trades.

Fourth, the English clearly understood gains from specialization, and
believed that the Native Americans could harvest beaver and other furs much
more cheaply than European trappers. Hence, the trading posts were just that,
a place where two cultures could interact to provide substantial gains for
both groups.

Finally, there was a general understanding of the problem of
over-exploitation of an open access resource, and where the British has a
monopoly on trade they were careful to discourage over-trapping. In regions
where there was an interface with French traders, and when a single tribe did
not have complete control of an area, over-exploitation did occur. Also, some
of the cultural norms of the tribes that allowed harvesting for survival
meant that it was difficult to establish and enforce well-defined property
rights to fur-bearing animals, particularly beaver.

Carlos and Lewis also provide interesting insights into long-term growth
issues. They call the eighteenth century “the golden age” for the tribes
in northern regions. Their per capita income compared favorably to working
class British. That was because they controlled a valuable resource,
primarily beaver pelts that were valued in Europe for hats. Once that
resource was exploited and most of the gains from trade had been realized,
there was little basis for ongoing economic growth, hence over the long-run
the tribal communities did not experience the increases in per capita income
that occurred in Western Europe and the parts of North American with
permanent European settlers.

This is a delightful book to read. It is fascinating in terms of its insights
into the trading culture of a particular place and time and it also provides
useful correctives to many misconceptions about various aspects of that
trading.

Peter J. Hill is Professor of Economics at Wheaton College (IL) and the
author, with Terry L. Anderson, of The Not So Wild, Wild West: Property
Rights on the Frontier (2004).


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One response

30 11 2010
Eric Dolin

Great review. Looks like a very good book. You might also be interested in my book, on a related topic — FUR, FORTUNE, AND EMPIRE: THE EPIC HISTORY OF THE FUR TRADE (W. W. Norton, July 2010). Happy reading!

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