The reservation policy of the federal government was introduced in 1851 with a policy of Indian "concentration." The government "pressed tribes to sign treaties limiting the boundaries of their hunting grounds to 'reservations'...where they would be taught to farm" (Davidson 511). American settlers would often break the treaties by "squatting on Indian lands and demanding federal protection" (Davidson 511). The federal government would then send troops to protect settlers from Indians.
I believe he U.S. should have done absolutely nothing regarding Native Americans. It would have been extremely interesting to see exactly how American settlers would have protected themselves. Most likely, they would have had to assimilate or establish close trade connections with the Indians. This would have most likely created a tight relationship between the two groups possibly making it more difficult to fight one another. This whole process reminds me a lot of the situation in Palestine between Israelis and Palestinians. Israel often promises to punish settlers who move into Palestinian territory, yet Israel does nothing to stop them from moving their in the first place. At the very least, the government shouldn't offer protection to individuals who aren't even in their land, at least according to world treaties, in the first place as it only adds more fuel to the fire.
Davidson, James, Brian Delay, Christine Heyrman, Mark Lytle, and Michael Stoff, Nation of Nations: A Narrative History of the American Republic Volume II: Since 1865. New York: McGraw-Hill, 2008.
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