The Fantastic Federal Fur Failure

Click for audio The Fantastic Federal Fur Failure

Privatization is nothing new. The very first U. S. industry to get federal subsidies collapsed, and its assets had to be sold on the open market. And it happened in Michigan.

In 1795, Congress created a fur trading company to compete with British fur traders. Government trading posts were set up in locations including Detroit and Mackinac Island.

Local Indians brought furs to the trading posts. But the government fur company had a social, not a business, agenda. It tried to change the Indians from hunters to farmers by offering plows, hoes, and musical instruments in exchange for the furs. The Indians wanted muskets, gunpowder, and kettles instead.

The government company stumbled, draining up to ten million in today’s dollars from the treasury. But private fur traders made money instead of losing it, by giving the Indians what they wanted in exchange for their furs.

After 27 years, the federal fur company had failed to make money or change the Indians. Congress shut it down, realizing it should not spend tax dollars to do something that entrepreneurs were already doing better. The federal fur failure is a lesson lawmakers should remember today.

For the Mackinac Center, this is Catherine Martin.