Third World Islands in a Sea of Relative Prosperity
Minneapolis Fed joins effort to capitalize Indian reservations
Published June 1, 1994 | June 1994 issue
If you look carefully while traveling along Route 44, about 20 miles west of Mission, S.D., you will come to a sign by the side of the road near Route 1. It's a hand-lettered sign, crooked and weathered and not very impressive. But if you succeed in following the directions on the sign you will eventually come to the St. Francis Indian Mission on the Rosebud Sioux Reservation, and you will see firsthand some of the strange contradictions that define life on Indian reservations throughout the Ninth Federal Reserve District.
One of the more sublime contradictions on the Rosebud Sioux Reservation is the memorial to a young 17th century Iroquois woman at the St. Francis Mission. Standing stoic and ever vigilant in the front of the church grounds is the statue of Kateri Tekakwitha. She was born in the Mohawk Indian Village of Ossernenon in central New York in 1656, far from this Plains Indian reservation in time, culture and in miles. Kateri Tekakwitha symbolizes perseverance in the face of overwhelming oddsthe struggles of her people. She is a Roman Catholic saint revered by the Lakota people for her classically Indian attributes of forbearance, spirituality and heroism.
The St. Francis Mission is a contradiction itself. It is a Jesuit enclave in the midst of Indian country. Nestled in the pines of the mission is the Buechel Memorial Lakota Museum, which includes an impressive display of Lakota artifacts and crafts, as well as an explanation of why Kateri Tekakwitha is remembered by the Sioux Indians, 1,500 miles from her home in central New York.
The story of Kateri Tekakwitha is compelling. Although weakened by smallpox, this ten-year-old orphan was entrusted with the care of several Jesuit priests when the Iroquois were at war with the Algonquins in the year 1666. Her courage and heroism were instrumental in securing the safety of the priests. She, in turn, was so inspired by the Jesuits that she converted to Christianity and retained her faith despite the ill- treatment from her own family and tribe that resulted. It is said that upon her death at age 24 her face was so beautiful, even though her body was ravaged by illness, that the Indians could not but admire her transformation. To many Lakota people on the Rosebud Sioux Reservation she personifies the Indian experience in this country.
And the Indian experience is now a hot item in this country. Fueled at least in part by the movie "Dances With Wolves," interest in authentic Indian life has grown substantially in the past few years. This has caused some problems and offered some opportunities for Indian tribes. While desperately needing the influx of dollars that would accompany an expanded tourism industry, many of the Plains Indian tribes have nonetheless not embraced this opportunity so quickly. They fear the loss of their sacred ceremonies. They fear that non-Indians may misinterpret the spiritual underpinnings of their ceremonies and cling instead to the superficial. They do not want to be thought of as quaint and odd. But they do need the income they can derive from tourists. As yet neither the Rosebud Reservation nor Pine Ridge, another Sioux reservation just to the north and west of Rosebud, has successfully found a way to take advantage of the tourism potential and at the same time preserve the sanctity of their culture and spirituality.
The oddity of an Iroquois Indian/Catholic saint revered by the Lakota and the conundrum of preserving spiritual values while capitalizing upon tourism potential must be seen through the prism of the persistent poverty that grips the Rosebud and Pine Ridge Sioux reservations, as well as nearly every other reservation in the country. While the rest of the country recently emerged from a recession, Rosebud, like Pine Ridge, is still a tenacious island of unemployment and poverty, with family incomes far below the national average. Alcoholism, a perennial concern, remains a serious social problem.
Breaking down cultural/economic barriers
One of the most serious economic problems Indians face is access to capital. Cultural differences between Indians and non-Indians have historically prevented Indians who live either on or off reservations from having the same access to capital that non-Indians have long enjoyed. The cultural differences between Indians and non-Indians persist to this day. Indeed, to many Indians it is imperative that the differences not be eliminated. However, it is just as imperative that the cultural differences that have resulted in inequitable access to capital be de-clawed and equal access be ensured for Indians.
Compounding the cultural differences are legal concerns that have also historically been a barrier to conventional bank lending on reservations. These issues include sovereign immunity, tribal court jurisdiction and perfecting title on lands held in trust for tribes by the federal government. To combat these serious cultural and legal issues, over the last two years the Federal Reserve Bank of Minneapolis has examined the role it can play in the economic revitalization of the most severely distressed reservations in the Ninth District. To that end, the Minneapolis Fed has developed a curriculum to teach bankers and tribal members how to overcome at least some of the barriers to lending in Indian country. Three seminars have been held thus farone in Chamberlain, SD, and two in Minneapolisand each one has been oversubscribed.
The seminars are conducted by Jim West, president of Jim West Financial Group and a member of the Cheyenne and Arapahoe tribes of Oklahoma, and by Mark Jarboe, partner in the law firm of Dorsey and Whitney, Minneapolis. Aside from a discussion of legal and financial issues, such as sovereign immunity or ownership of tribal lands, West and Jarboe provide a cultural and historical overview that colorfully describes the culture gap that may exist between Indians and non-Indians. Such seemingly innocuous issues as the willingness of certain tribal members to shake hands or make eye contact, as well as the meaning and value tribes place on trade and profit, are important considerations for non-Indian lenders.
In the seminar, West uses the example of a Lakota convenience store owner selling items priced differently for certain customers. If, for example, the store owner's elderly auntwho is having financial troublescomes in to buy some essential goods, the Indian store owner may charge her a lower price than he would charge to someone he did not know or he knew to be better off financially. Such a pricing system might be consistent with Indian culture but is inconsistent with profit-motivated business practices, leadingin the extremeto failing business ventures.
Knowing about the inclination toward "good trades" from the outset, West suggests, may help a commercial lender to better identify risks and to help structure business ventures with an eye toward overcoming the difficulties of operating businesses with such cultural underpinnings.
Of course, cultural barriers can sometimes take a more insidious shape: It has been postulated that discrimination against Indians is the primary culprit in preserving the poverty on so many of the reservations, if not the rationale behind the reservations themselves. However, with so many social and economic factors at work and so many contradictory federal policies and programs, it is impossible to lay all blame at the foot of racial discrimination, greed, misunderstanding or some other human frailty. Even so, discrimination is a real problem, and there are steps to eliminate its effects, if not the root causes. Educational outreach, such as West and Jarboe's seminars, as well as regulatory and legal action by government agencies, are some of those steps.
Capital from within
More important, perhaps, than efforts by the Minneapolis Fed and other outside institutions to increase the flow of capital, are the initiatives under way from within the reservations. Two non-profit organizations have emerged that are providing much needed capitaland hopefor small business development on the Rosebud and Pine Ridge reservations. And as the contrary state of affairs on the reservations dictates, the model these two organizations follow is one that was developed at a bank halfway across the world in Bangladesh rather than one created here at home on Wall Street.
The Sicangu Enterprise Center on the Rosebud Reservation and the Lakota Fund on Pine Ridge are examples of organic lending programs, that is, programs created by Indians and administered by Indians. Both organizations make small business loans (as little as $200) to tribal members using a "peer lending" technique in which teams of borrowers assist one another in formulating their business plans and marketing efforts, and who are collectively responsible for the repayment of the loanthe Grameen Bank model first developed by Dr. Muhammad Yunus in Bangladesh.
Why do these groups use a lending model developed in Asia rather than a more traditional American banking model? Because the economy on these two Indian reservations is closer to a Third World economy than it is to the more conventional notion of a mature economy in a developed nation. According to Fred J. Carrier, writing in The Third World Revolution (1976), Third World nations generally have the following socio-economic characteristics:
- Fifty percent or more of the people are engaged in agricultural work or are unemployed.
- It is generally underdeveloped industrially and hence cannot modernize agricultural production.
- The income originating in a nation, the value of its productivity, may not remain in that nationparticularly if that country is heavily capitalized by foreigners.
- There is abundant labor with high school education or less.
- There is a marked increase in negative social indicators, for example, life expectancy at birth, infant mortality and teenage suicide rates.
It's not just casinos
Sadly, these characteristics closely match the life on most of the Indian reservations in this country. But not all. Once again, Indian reservations in the Ninth District are fraught with contradictions. While many of the reservations in the district do indeed share the features of a Third World economy, there are some that have emerged and are exhibiting strong economic growth and potential. By and large, this growth is fueled by gaming and it is mostly confined to Minnesota.
Indeed, there are 16 Indian-owned casinos in Minnesota providing job opportunities and income growth for tribal members and others. In contrast to the Lakota tribes in South Dakota where casino gambling is not as prevalent, some Minnesota tribes have vast stores of funds. The Treasure Island Casino in Red Wing, Minn., on the Prairie Island Indian Reservation, has provided the funds for a $6.5 million community center, a new kindergarten and day care centers. The Shakopee Mdewakanton Dakota have developed the Mystic Lake Casino in Dakota County, just south of the Twin Cities. With the help of gaming revenue the tribe's Little Six Corp. is aggressively seeking new investment opportunities and diversifying into other non-gaming activities that are designed to increase job opportunities and income potential for tribal members. The Mille Lacs Band of Ojibwe in Mille Lacs, Minn., also has benefited greatly from gaming. In stark contrast to the very modest buildings and grounds of the St. Francis Mission School, the Nay Ah Shing School on the Mille Lacs Lake Reservation has state of the art facilities. Gaming revenue has also provided funds for a new health clinic at Mille Lacs, a water treatment plant, community centers and new housing and roads.
In Pablo, Mont., there is a reservation that has built a diversified economic base from whole cloth, not from gaming revenues. The Confederated Tribes of the Salish and Kootenai on the Flathead Reservation developed the Kwataqnuk Resort in Polson, one of the most successful resort hotels in the Glacier Park area. Their S & K Holding Co. owns and operates Sovereign Leasing Corp., a vehicle and equipment leasing operation; S & K Electronics Inc., an electronics firm that derives about 90 percent of its revenue from U.S. Department of Defense contracts; Gray Wolf Construction, a commercial construction firm; and The Marina, a new and used boat sales and marine equipment company, among other operations.
According to Larry Hall, manager of S & K electronics, the tribe was able to undertake these business ventures and the reservation enjoys relative economic health because of its ability to keep and develop its human resources. Unlike other Midwestern reservations that have chronically lost many of their tribal members just when they have reached their peak earning years, the Flathead Reservation has retained that precious resource.
It doesn't hurt that the tribe also has abundant natural resources, such as timber and hydroelectric power. But the tribe has not blindly exploited its natural resources and it has worked hard to preserve its quality of life. That commitment has extended to its development of the tourism potential on the reservation. Where Pine Ridge and Rosebud have stumbled in their efforts to capitalize on the growing interest in Indian culture and "habitat," the Confederated Tribes of Salish and Kootenai have come firmly to grips with the need to preserve their sacred ceremonies while at the same time allowing non-Indians to witness and participate, albeit vicariously, in Indian life.
But not all is well in Montana. About 300 miles east of the Flathead Reservation near the Canadian border is the Rocky Boys Reservation. Like Pine Ridge and Rosebud it has severe unemployment, a high infant mortality rate and none of the abundant natural resources enjoyed by the Confederated Tribes of the Salish and Kootenai. But it doesn't lack for energy. The Chippewa-Cree Tribe has developed independent cattle operations and a steel fabrication business, but that reservation's economy clearly remains Third World in character.
In the years to come, through efforts from within and outside the reservations, the economic success stories that are occurring in Indian Country may become less of an anomaly and more the norm; and, rather than looking beyond their borders and culture for inspirationlike Kateri Tekakwitha's presence on the Great Plainstribes will turn to even more of their own models of enterprise.