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 Indian Alcohol Trade Goods Factory System Images 


Ned Eddins


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 The Factory System:

Congress passed four Trade and Intercourse Acts pertaining to Indian affairs and commerce between 1790 and 1799. Under the 1790 act, the “Factory System” was established in 1791. With the Factory System, the Federal Government attempted to control the Indian fur trade as a means of “civilizing” the Indians in order to acquire Indian hunting grounds. Government officials believed if trade goods were provided at a fair price it would keep the Indian villages close to the factory posts, and would eventually lead to the Indians assimilating into the white man culture. The Trade and Intercourse Acts did not prevent private traders from competing with the government factory posts.

In 1802, an amendment was added to the Trade and Intercourse Acts outlawing the use of liquor in the Indian fur trade.

President Jefferson (1801 – 1809) attempted to regulate the Indian trade through the Factory System. Jefferson’s Indian Policy centered around extinction of the savage way of life, assimilating the surviving Indians into the white economy, and the purchase of Indian hunting grounds for white settlements. His policy had three basic steps for acquiring Indian land:

(1) If necessary bribe influential chiefs to sign treaties, and if that failed any chief would do.

(2) Establish posts for protection against other tribes in exchange for land.

(3) Use cessation of trade, and/or declaration of war, to force Indians into giving up their hunting grounds.

President Jefferson had conflicting views on the American Indians. He believed the Indian culture and the American culture were incompatible. But he also believed, Indians had the oratory skills and family values to climb the ladder of cultural evolution. Indians could be incorporated into the young republic but not in the hunter-gather state. As long as Indians had hunting grounds, they could not be civilized. His belief was the tribes not accepting the white man’s civilization should be moved west of the Mississippi. He regarded this as a temporary solution, and eventually, the Indians must adapt to the American way, or be eradicated.

President Jefferson’s new republic with liberty and equality for all did not apply to the American Indians. The creation of the new republic sealed the fate of the Indians as roving hunters (Wallace). 

The factory posts could not compete with traders that illegally, or legally, took alcohol to the Indians…federal trading license allowed the traders to take liquor with them for use by their boatmen. The government operated Factory System was abolished in 1822, but the laws making it illegal to sell alcohol to the Indians remained on the books.

In July 1832, Congress passed a law totally banning alcohol in the Indian country.

The American Fur Company, which had been the chief lobbyist against the Factory System, was the most effected by this law. The company’s mode of transportation to and from their posts was by steamboat, and these boats were subject to inspection.

Wind River Mule Deer

During his presidency, Thomas Jefferson acquired close to 200,000 square miles of land primarily along the Ohio and Mississippi Rivers. This isolated the Mississippi Valley Indians between the Mississippi River and the Appalachian Mountains making them easier to dominate. The land cessation treaties also allowed for roads running east and west to pass through Indian lands (Wallace).

In 1808, William Clark built Fort Osage (Fort Clark) on the Missouri River fifty miles below the mouth of the Kansas River. Fort Osage was established to check boats for illegal whiskey, as well as, placate the Osage. Clark promised the Osage the “Great White Father” would:

…build a fort to protect them from the Sioux

provide the Osage people with annual annuities,

…establish a nearby trading post for their trade.

For the government building Fort Osage to protect them, the Osage relinquished territorial claims east of a line running from Fort Osage to the Arkansas River. The land given up by the Osage Indians amounted to fifty thousand square miles along the Missouri and Mississippi rivers.

Fort Osage was the second factory post established west of the Mississippi. Inspecting the Missouri River boats at Fort Osage for alcohol did little to stop the flow of liquor into the Indian country. If boats carried more alcohol than they were legally allowed, some traders sneaked by the fort at night and unloaded the excess liquor, floated back downriver, and then stopped the next morning for inspection. Other traders stopped below the fort, unloaded the illegal Indian alcohol, and then packed the illegal whiskey around the fort.

Fort Osage was replaced by Fort Atkinson near Omaha, Nebraska as the major military post on the Missouri in the 1820s.

JS-Fort Atkinson Barracks
Fort Atkinson

Fort Atkinson was closed in 1827, and the garrison transferred to the newly built Fort Leavenworth near present day Kansas City, Kansas. With the closing of Fort Atkinson, there were no permanently garrisoned army posts on the Missouri River.

By in large, the federal government tried to implement a fair policy towards the Indian Nations, but the government departments involved with Indian affairs were staffed with too many incompetent bureaucrats, including some military leaders, that hated Indians. Any federal Indian Policy dealing fairly with the Indian tribes had little chance of success. In addition to this, there was too much money involved in the fur trade and the whiskey trade to control it. With the use of liquor, American traders reaped huge profits.

The use of whiskey by American traders was essential to compete with Hudson’s Bay and North West traders for the Indian furs and buffalo hides along the Canadian boarder. Canada had no restriction on the sale of alcohol to Indians. Hudson’s Bay and the North West Company officials realizing the dangers involved…intoxicated Indians hanging around the posts did not bring in furs and hides…made their traders use it in a responsible manner.

Beaver House Dam
Beaver House Dam

In 1824, William Ashley abandoned the Missouri River route and sent his trade caravans overland to the Rocky Mountains. It was virtually impossible to inspect the overland parties for illegal alcohol. Small parties went without being licensed, and those with a license were allowed to take liquor for their boatmen.

In the spring of 1832, William Sublette renewed his annual trading license. The license stipulated Sublette could take four hundred and fifty gallons of whiskey for his boatmen, but he was compelled to post a bond not to sell whiskey to the Indians…Sublette went overland to the Pierre’s Hole rendezvous without the use of a single boatman (Chittenden).

Whiskey used in the Indian trade was in most cases transported to the Indian country in the form of alcohol. Once there, the Indian trade alcohol would be cut three or four times with water before trading to the Indians. Tobacco, red pepper, black molasses, and anything else the traders could come up with was added to the diluted alcohol to give it a kick. As the trade progressed, the whiskey was often diluted more and still produce the desired effect. Since it was illegal to sell whiskey to Indians, the “firewater” was often given away the day before the trading started. By the next morning, Indians gave up their furs clamoring for more whiskey, which by this time was almost straight water with tobacco juice added for color.

Afraid the American Fur Company would loose the upper Missouri trade to the Rocky Mountain and Canadian fur traders, Kenneth McKenzie transported the necessary equipment up the Missouri in the spring of 1833 to build a whiskey still. At the mouth of the Iowa River, he left men to raise corn for his still (Chittenden). S. Cerre´, one of Captain Bonneville’s chief lieutenants, and Nathaniel J. Wyeth visited Fort Union in August of 1833. Proud of how well his new still was working, McKenzie showed it to his visitors. When Wyeth and Cerre´ left, they were outraged at the prices McKenzie charged for his goods, and he would not sell them any of his liquor for their own trade. When the two men reached Fort Leavenworth, they reported the presence of a whiskey still at Fort Union. The still was shut down a year later. The distillery at Fort Union effectively ended the career of the American Fur Company’s best field trader, Kenneth McKenzie (Chittenden).

Not all tribes were susceptible to the Indian alcohol trade, but for those that were, it created widespread havoc…alcohol had devastating effects on the Indian village and in many case their culture as well. In fairness it should be pointed out the Indians willingly accepted the traders whisky and soon reach the point they would not trade without it.

Still, there is no question, once the American Indian’s inherent weakness for alcohol was known, fur traders and land speculators used alcohol to get Indian furs and land. 

The Indian Alcohol article was written by  Ned Eddins of Afton, Wyoming.

Permission is given for material from this site to be used for school research papers.

Citation: Eddins, Ned. (article name) Afton, Wyoming. 2002.

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 Reader Response:


In your comments you state that Ft. Clark was the only indian factory/fort west of the Mississippi.   Do you mean the only that also functioned as a fort with a military garrison or just a trading factory??  Ft. Clark was not the only factory.

Rich is right. Fort Belle Fontaine was built on the south bank of the Missouri River near St. Louis in 1805. Cantonment Belle Fontaine served as a trading post or “Indian Factory” for the local Indian tribes. The Indian trade goods at the Belle Fontaine Factory Post were moved to Fort Clark in 1808.

Steve Banks, Du Boise, Wyoming

This point of view doesn’t get much press in these terms.  If you will permit, I’ll add a few more points.

The Indian Trade and Non-Intercourse Act of 1790 is very interesting.  Its main point said, “Indians could not sell any of their land without Congressional approval”.  Whites thought of ways to get around this. Indians were plied with alcohol and under the influence were bilked out of pelts etc, and as they became more dependent on the White trade goods went deeply into debt.  Of course the simplest way to get out of debt was to give up lands.  In our time, this has had a disastrous effect on the Federal Government. In the late 60’s and early 70’s much of New England nearly reverted back to the Indians because of the violation of the 1790 act.  Now the Government makes large monetary payments to these Indians!!

Katrina Smith Honor, MI

I wish I could agree with Mr. Banks’ comments.  As a member of a federally recognized tribe, I received my “Lands Claims Settlement” check a few years ago.  After almost a lifetime of dispute between the state of Michigan and the five recognized tribes, I was awarded a one-time payment of $3000.  That is hardly the “large monetary payments” Mr. Banks indicated.  The only justice that has been served to the people who supplied Indians alcohol is that Natives introduced them to tobacco.  Thank you Phillip Morris!!

I am sure Mr. Banks was referring to the overall settlement, and as is too often true, by the time the money reaches the individuals it was intended for, there is not much left. Please take some satisfaction in your last two lines have brightened up my whole week, thank you.


Berry, Don. A Majority of Scoundrels. Northwest Reprints, Oregon State University. Corvallis, Oregon. 2006.

Chittenden, Hyrum Martin, American Fur Trade of the Far West, Volume I. The Press of the Pioneers, Inc., New York, New York, 1935.

Gowans, Fred. Rocky Mountain Rendezvous. Perrigrine Smith Books Layton, Utah. 1985.

Haines, Francis. The Plains Indians: Their Origins, Migration and Cultural Development. Thomas Y Crowell Company. New York, N.Y.. 1976.

Wallace, Anthony F. C.. Jefferson and the Indians. The Belknap Press of Harvard University Press, Cambridge Massachusetts, 1999.