by: Alex Flores
Earlier this month a Fox News poll found that corruption in government is now the top concern of American voters, above inflation and gas prices. Most people who answered that poll were picturing current scandals. But some of the worst corruption in modern American history played out over decades, under Democrat and Republican presidents, and most voters have never heard of it.
The Books Don’t Balance
Fifty years ago, the Blackfeet Nation in Montana asked a woman by the name of Elouise Cobell to serve as their treasurer. She was a trained accountant, and, as she began her work for the nation, she noticed something strange about the numbers. Oil was coming off Blackfeet land. Grazing and timber leases were being signed. The money from all of it was supposed to land in accounts the federal government managed for individual Blackfeet landowners. But very little of it ever arrived.
Cobell knew that pattern long before she saw the books. She grew up in the 1950s on a small Blackfeet ranch with no electricity or running water. She was the middle of nine children. Her relatives told her about Ghost Ridge, a rise in the landscape near her uncle’s house. More than 500 Blackfeet were buried there after the Starvation Winter of 1883 andg1884. The US government had promised rations by treaty. The local federal agent decided to sell them on the black market instead.
Her parents’ lease checks came intermittently, some years and not others, in amounts nobody could predict or explain. When she turned 18, she asked the Bureau of Indian Affairs (BIA) for an accounting of her own trust money. They told her she wasn’t capable of understanding it. In college she clerked at the BIA office on the reservation and watched families wait on hard wooden chairs for hours on end, only to be sent home without their own money. Years later, as treasurer, she asked why the nation’s trust funds were earning negative interest. They told her to learn how to read a financial statement.
She didn’t wait for Washington DC to fix anything. When the only bank on the reservation closed in 1983, she organized a new one. Blackfeet National Bank opened in 1987, the first national bank owned by a Native nation. It later expanded and became the Native American Bank, owned by more than twenty nations. As she put it, “How could you feel like a person and walk away from the corruption?”
In 1996 she sued. The case, Cobell v. Salazar, became one of the largest class actions ever brought against the United States government. When she won a MacArthur fellowship the next year, she put the $310,000 into the fight. It ran for thirteen years and spanned four Secretaries of the Department of the Interior (DOI). It ended in a $3.4 billion settlement. And you’ve probably never even heard mention of her name.
Libertarians should know it by heart. The Cobell case shows what happens when a government holds other people’s property, keeps the only set of books, and answers to nobody.
A Trustee That Couldn’t Count
The accounts at the heart of the case are called Individual Indian Money accounts. They trace back to the allotment era that began in 1887, when the US government carved reservations into individual parcels and kept the titles “in trust.” Leases, timber sales and mineral royalties on those lands were paid to the federal government. The government was supposed to pass the money on to the owners. By the time Cobell filed suit, the system covered about 11 million acres and hundreds of thousands of accounts.
The theory behind it goes back to 1831, when the Supreme Court compared the relationship between Native nations and the United States to that of “a ward to his guardian.” The “guardian,” as it turned out, didn’t know how many “wards” it had. In court, the government admitted it didn’t know the exact number of accounts it was managing, or what the balances should be. The DOI conceded it couldn’t give an accurate accounting to most of the people for whom it was holding money. Its own figures showed that only 77 percent of the money collected into the system was posted to anyone’s account.
The plaintiffs put the shortfall in the billions. Some estimates ran as high as $100 billion. The true number will never be known, because so many of the records needed to calculate it are gone.
The Defendant Wrote the Rules
A private trustee who lost track of the money would be removed and made to pay it back. Predictably, the US government fought every step of accountability instead.
In 1999 Judge Royce Lamberth ruled that the heads of the DOI and the Treasury had breached their duties to the account holders. That same year DOI Secretary Bruce Babbitt and Treasury Secretary Robert Rubin were held in contempt of court over the government’s handling of trust records. Yet, documents kept disappearing while the case was underway. The Treasury had allowed records older than about six and a half years to be destroyed, with no effort to save the ones the accounting depended on. Babbitt’s successor, Gale Norton, was held in contempt in 2002.
In 2003, the court ordered a full historical accounting. Congress then stepped in on the government’s side. Legislators attached a rider to a spending bill, declaring that no statute and no principle of common law required the DOI to keep doing the accounting. Lawmakers said compliance could cost upward of $6 billion. Two later spending bills held the accounting to $58 million. Lamberth called it “a bizarre and futile attempt at legislating a settlement.”
In other words, the party being sued for losing other people’s money then used its control of the budget to stop anyone from counting. Then, in 2008, a new judge ruled that a true accounting was impossible because Congress had never funded one. The government created the problem and then used it as an excuse. No private trustee in America could get away with that. But, for the government, it’s standard operating procedure.
Honestly, none of this surprised me. Rather than give the land back or try to make it right, government officials acted like a corporate law firm, limiting the damage while holding onto as much of the assets as they could.
Theft Without a Thief
Once you know the story, you might think it’s easy to file Cobell under history. It was bad book keeping, and happened a long time ago, and it’s settled now. Right? That would miss the lesson and doom us to keep repeating it.
Look at how the arrangement worked. One party held title to another’s land. They collected the income. They kept the only set of books. They set their own budget for being audited. When a court got too close, they rewrote the law. Under those conditions, theft doesn’t require a thief. It only requires time.
Libertarians have seen this before. Civil asset forfeiture lets agencies take property from people never convicted of anything and then fund themselves with the proceeds. Eminent domain lets a government decide your land serves a higher purpose. Qualified immunity shields officials from paying for the harm they cause. In each case, the people holding power over someone else’s property also decide whether they’ll ever answer for it.
Cobell is one of the longest-running and best-documented examples of that pattern. It ran on Native land for more than a century. The people on the losing end were the very people the government swore to protect. Sound familiar?
In 2018, I spent some time in Northwestern New Mexico and heard from Diné (Navajo) people about royalties on allotted land near Chaco Canyon that never seemed to reach the families who owned it. Turns out, during the Cobell case, a court-appointed investigator found that energy companies paid private landowners near the Navajo reservation nearly 20 times what Diné allottees received for pipeline rights-of-way. The federal official who helped him uncover it was fired. The investigator resigned, saying the DOI had put energy companies ahead of the people it was sworn to protect. In 2017 the DOI’s own Inspector General found that the office handling those royalties still couldn’t reconcile its leases.
Ending the Guardianship
The settlement did some good. Many account holders received checks of about $1,000. A buy-back program returned scattered pieces of allotted land to the nations they came from before it closed in 2022. Leftover money funds scholarships for Native students. Elouise Cobell lived to see the deal signed. She died in 2011, and she was awarded the Presidential Medal of Freedom in 2016.
But the guardianship survived the settlement. The U.S. government still holds title to millions of acres of Native land. It still manages money that belongs to other people. It still has no plans to give it back.
In the Libertarian Party platform, the Statement of Principles opposes all government interference with private property, including confiscation. Plank 2.1 recognizes rectification, the transfer of property to the victim of aggression as compensation. Plank 1.3 commits us to government transparency. Plank 3.7 affirms the right of people to alter, abolish, or withdraw from a government that is destroying their liberty.
The LNC’s sovereignty resolution, passed unanimously, builds on that foundation. It treats First Nations as a jurisdiction in their own right, distinct from the states and from DC. And that’s where the answer to Cobell begins. Return title and management to the nations and the people who own the land. Give every owner full access to the books on what is still held. Restore what was taken.
The Cobell case shows what government becomes when it gets to be guardian, banker, auditor, and lawmaker all at once. The land and the money were never the U.S. government’s to hold in the first place. It’s long past time that wrong gets made right.