1. Department of Economics
Buffalo Hunt
International Trade and the Virtual Extinction of the North American Bison M. Scott Taylor
Department of Economics

2. Buffalo Biology
The American Bison or Buffalo soon became an emblematic figure of the West. Bison are huge. Males weigh about 1200 kilos, stand over 2 meters at the hump, and are 4 meters long. They can jump a two meter fence, and run at about 60 km/hr for distances of 10 km. Females are only slight smaller. Bison separate for much of the year into sex segregated herds and locate in small valleys or woodlands to escape the harsh winter; in the summer the herds come together in the Plains for calving season in the spring and then rutting season in the summer and early fall.

3. Original habitat of the American bison was over 3 million square miles
Original habitat of the American bison was over 3 million square miles. About the size of present day Australia. They were in all U.S. states except the New England states and present in Four Canadian provinces and two territories. The bison were and are the largest land mammal in North america since the Pleistocene extinctions over 10,000 years ago that eliminated their distant and larger cousins the Bison Latifrons and the Bison antiquus.

4. Buffalo History
Pre-European contact population of perhaps 20 to 25 million animals.
Habitat destruction and subsistence hunting slowly removed the populations east of the Mississippi by approximately the 1820s.
By the 1860s, buffalo only on the Great Plains. West of the the 98th meridian, East of the Rockies.

5. Original habitat of the American bison was over 3 million square miles
Original habitat of the American bison was over 3 million square miles. About the size of present day Australia. They were in all U.S. states except the New England states and present in Four Canadian provinces and two territories. The bison were and are the largest land mammal in North america since the Pleistocene extinctions over 10,000 years ago that eliminated their distant and larger cousins the Bison Latifrons and the Bison antiquus. 5

6. Post civil war 1865 population of perhaps 10 million buffalo.
Completion of Union Pacific Railroad divided the herd into small Northern and large Southern herds.
Slaughter on the “Great Plains”. Southern herd eliminated from 1871 to Northern herd eliminated from
In a little more than 10 years, population fell from perhaps 10 million to 100.

8. Who Killed the Buffalo?
Settlers came, bison habitat was reduced, buffalo numbers fell.
There was a huge in migration of settlers westward starting in the 1840s with the California Gold rush. The Santa Fe Trail from XXXX to XXx and the Oregon Trail from XXXX to XXXX brought XXXX millions of settlers across the Great Plains in the 19th Century. These settlers altered the Bison’s habitat and preyed on them for food and buffalo robes.

9. The Army came, wanted the bison dead to “civilize” the Indians, they facilitated hunting, and buffalo numbers fell.
“Send them powder and lead, if you will; but for the sake of a lasting peace, let them kill, skin, and sell until the buffaloes are exterminated”
General P. Sheridan
“Kill every buffalo you can…every buffalo dead is an Indian gone”
Colonel R.I. Dodge
The 19th Century was also the century of large Indian wars in the U.S. The Indian question was solved by a system of treaties and the reservation system, but to generate this outcome the U.S. Army fought many wars against various Plains Tribes. Many prominent generals from the War Department, and high ranking officials in the Grant Administration were quoted as linking the destruction of the buffalo with the domestication of the native Americans. 9

10. The Railroads came, they created a market for their meat and robes, they facilitated hunting, and buffalo numbers fell.
The 19th Century also saw the completion of the first transcontinental railroad across the U.S. The Union Pacific meeting West to East in In addition, the Santa Fe, Atchison and Topeka railroad ran from Chicago into the heart of Texas in the mid 1870s, and the Northern Pacific reached Montana in These Railroads both brought hunters to the buffalo and buffalo products to Eastern Markets.

11. New rifles came, allowing hunters to shoot from 600 yards away and kill 100 buffalo in a “stand”. The Sharp’s Big 50 facilitated hunting, and buffalo numbers fell.
The end of the U.S. Civil War in 1865 also released thousands of young men with low opportunity costs and expertise with rifles. At that same time, the Sharp’s rifle company perfected their Buffalo rifle the Sharps Big 50 or 50 caliber. It weighed almost 16 lbs with a 30 barrel. It could kill at half a mile, was very accurate at less than 500 yards. The Sharp’s Big 50 helped perfect the long range killing used by buffalo hunters. Natives called the big 50 – the gun that shoots today and kills tomorrow.

12. Whiskey and White traders altered Native hunting practices
Whiskey and White traders altered Native hunting practices. Native hunting & drought killed the buffalo.
Contact with Americans in the West had disasterous consequences for the Plains Indians. Disease and war reduced their numbers to less than 300,000 by 1870 from a pre-contact population of something like 3 million. Traders used whiskey and cheap trade goods – including rifles – to barter with the natives for buffalo robes. Robes are thick buffalo pelts taken in mid-winter, and then tanned in a laborious process using bison brains and liver. The late 1800s also produced periods of extended drought whereas the period from 1830 to 1850 had been unusually wet and bison populations may have overgrown in this period.

13. What needs to be Explained?
Why was the slaughter a slaughter?
Tanning innovation
Why didn’t prices adjust to limit the slaughter?
US was small on world markets
Where did all the buffalo products go?
France, Germany & the U.K.
There is a huge literature in history, sociology and political science discussing native culture, the role of the army, buffalo etc. To an economist though the slaughter of the buffalo raises three economic questions that any successful theory needs to answer. 13

14. The Frontier Economy Large number of potential hunters
Hunters differ in hunting skill
Hunters hunt or work on the railroad, on cattle ranches, or farm.
Killing is easier if the herd is larger
No regulation of buffalo kill
Natural growth of the buffalo plus killing determines the herd size.

15. X
100 80 60 40 20
600
1200
1800
2500
Buffalo Products

16. Other Goods Buffalo Products Production Possibilities Frontier
Four types of Hunters
100 80 60 40 20
600
1200
1800
2500
Buffalo Products

17. Other Goods Buffalo Products Slope = rise/run Slope = -20/1200 = -1/60
Slope = - MPx/MPh
100 80 60 40
Slope = - 20/600
Slope = -1/30 20
600
1200
1800
2500
Buffalo Products

18. All other Goods Buffalo Products Many types of Hunters
Slope = -MPx/MPb
Buffalo Products

19. To Hunt or Farm
Let Pb be the value of products you get from a buffalo kill; let Px be the price you get from selling one day’s output from farming.
Total Earning if Hunting for one day equals: Pb MPb
60 buffalo hides, 2$ hide = 120 $

20. Total earnings if Farming for one day equals: PxMPx
1 bushel of wheat, 25$ bushel = $25
Skilled hunters must hunt, since
Pb MPb > PxMPx
$120 > $25
Bad hunters must farm, since
Pb MPb <PxMPx
$20 < $25

21. Some hunter must earn the same amount in each occupation, and be indifferent.
Pb MPb = PxMPx
This implies the marginal hunter is one where:
Pb /Px = MPx/ MPb
The marginal hunter is found at the point where the slope of the PPF and price line are the same

22. X Pb/Px Buffalo Products All points above Pb MPb > PxMPx X* B*
All points below
Pb MPb < PxMPx
Buffalo Products

23. Summary
Point of production along PPF is at the tangency of the price line.
In this model, number of hunters and number of people in X can be read off the PPF.
As prices change, the marginal hunter changes.

24. All other Goods
X*/B* X*
Pb/Px B*
Buffalo Products

25. X
X*/B* X*
Pb/Px B*
Buffalo Products

26. Relative Supply Curve
Pb/Px RS
Pb/Px
Pb/Px
B*/X*
B*/X*

27. Relative Demand Curve
Pb/Px RD
Pb/Px
B*/X*
B*/X*

28. Combining
Pb/Px RS
Pb/Px
Pb/Px RD
B*/X*
B*/X*

29. Equilibrium RS
Pb/Px RD
B*/X*

30. Equilibrium X X*
Pb/Px B*
Buffalo Products

31. Summary Frontier Economy represented in a PPF
Two activities: Hunting or everything else
Price of buffalo products determines how much effort is expended hunting
Equilibrium price is where supply equals demand
We operate somewhere along the PPF.

32. 1870
Hunting is not excessive. It is just for meat and in the winter for robes.
The equilibrium shown may have just repeated itself year in and year out.
The Buffalo herd was shrinking but very slowly.

33. What happened in 1871?

34. The Innovation
Tanners in England, Germany and perhaps France discovered how to tan buffalo hides into useful leather.
Buffalo leather could then be used for industrial belting and for sole leather.
This new use for buffalo, raised the value of a kill tremendously. Pb/Px Rises. Demand must now include demand by Europe.

36. What does Economic Theory predict?
Two time frames.
Short run: when hunters adjust to new profit opportunities.
Long run: when the buffalo population adjusts to reflect the greater killing.

37. Pb/Px X X*
Pb/Px X* B* B*
Buffalo Products

38. As I came back in camp, I told the other fellers it was getting too warm too get the meat to market without spoiling. They says “Why don’t you just skin them and let the meat lay”, I says “What the devil would I do with the hide”, and they said ship it to W.C. Lobenstein in Leavenworth and he will send me a check. So next day, Burdett and I went a skinning.

39. New Equilibrium Demand equals Supply
Pb/Px
Bd/Xd
Bs/Xs

40. Trade in Buffalo Hides
Exports
Pb/Px
Pb/Px
Bd/Xd
B/X
Bs/Xs

41. Short Run Predictions Huge Increase in Buffalo kill
Large movement of people from other occupations to Buffalo Hunting.
Movement up the buffalo supply curve.

44. Trade in Buffalo Hides
Exports
Pb/Px
Pb/Px
Bd/Xd
B/X
Bs/Xs

45. Predictions
Higher price for Buffalo products raises the supply of Buffalo products – hides.
The gap between Demand and Supply represents Exports of Buffalo hides.
Total demand is local demand for meat and robes plus hide exports = total supply.

46. Long Run Predictions
As the herd is killed off, less buffalo could be harvested.
A smaller herd means the economy’s production possibilities frontier shifts inward.
A smaller herd means the economy’s relative supply curve shifts inward as well.

47. X
Pb/Px
Pb/Px X* B*
Buffalo Products

48. Trade in Buffalo Hides
Exports
Pb/Px
Bd/Xd
Bs/Xs

49. Trade in Buffalo Hides
Exports
Pb/Px
Bd/Xd
Bs/Xs

50. Trade in Buffalo Hides
Exports
Pb/Px
Bd/Xd
Bs/Xs

51. Prediction Over time exports should fall as the buffalo are wiped out.
Hide prices should remain constant even as the herds are extinguished.

52. The
Evidence

53. “Had there been a deliberate plan for the suppression of all statistics relating to the slaughter of buffalo in the United States, and what it yielded, the result could not have been more complete barrenness than exists to-day in regard to this subject. There is only one railway company which kept its books in such a manner as to show the kind and quantity of its business at that time. Excepting this, nothing is known definitely”
William Temple Hornaday, Smithsonian National Museum Washington, 1889

54. Existing Empirical Evidence Colonel Dodge’s 3 Numbers
Some numbers from Northern shipping points.

55. Use Trade Data on Hide Exports
U.S. exports of hides from
Destination of exports, prices, quantities.
Problem: cattle and bison hides are not separately listed.
Solution: use model of U.S. cattle industry to infer cattle hide exports.
Check implied buffalo hide export series against other pieces of data.

57. Texas, Oklahoma, New Mexico Slaughter
Montana Slaughter
Kansas Slaughter
Southern Herd Gone
5,000,000 exported
Tanning Innovation
Northern Herd Gone
1,000,000 exported

58. Evidence from Exports
Relative size of Northern versus Southern herd accords with other accounts.
Approximate kill for exports is 9 million over the entire period.
Export data shows exports to U.K. boom first, followed by Germany and then France.

59. Evidence from Prices

60. Table 1 – Hide Prices ($/Hide)
Year
W.P.
N.Y.
H.P.
1866
4.56
4.74
1876
3.25
4.04
2.32
1867
4.12
4.82
1877
3.40
3.42
2.43
1868
3.93
4.43
1878
2.96
3.03
2.12
1869
4.18
4.66
1879
3.12
4.51
2.23
1870
3.99
1880
3.53
3.58
2.52
1871
4.35
2.81
1881
1873
2.94
1882
3.37
3.26
2.41
1883
3.34
2.38
1874
4.20
2.85
1884
3.46
2.47
1875
3.84
3.89
2.74
1885
3.28
2.34
Notes: W.P. is hide prices found using the Warren and Pearson price index. N.Y. is hide prices found using data drawn from the Annual NY Chamber of Commerce reports. H.P. is the price-to-hunters series.

61. Evidence from Business Records

68. Maybe I am wrong

69. Alternative Explanations for the Data
Could the data be explained by a European demand shock that raised US exports of hides at just the right time?
Could the data be explained by a US supply shock that raised supply of hides in the US?

70. European Demand Shock
Collected data from all European countries that were large destinations for U.S. hide exports.
Data is the complete set of U.K. and French hide imports from all countries from 1866 to 1888.
Data is on raw hide imports.
Construct US shares of European markets. Is the share stable over time?

71. Table 2 – Difference in Means Test
H0: m0-m1=0
H1: m0-m1<0
Difference T
P<t
France
-5.02a
-3.69
0.001
(1.36) UK
-3.39a
-2.71
(1.25)
Notes: m1 is the mean of the Southern Treatment Group and m0 is the mean of the Other group. Standard errors are reported in parentheses, t is Student's t-statistic, and P indicates probability values. The superscripts. a,b,c: indicate significance at 0.01, 0.5, 0.1 level respectively. The dependent variable is the share of raw hide imports from the U.S. in total raw hide imports from all countries.

73. U.S. Supply Shock
Collected UK, French, Canadian and German import statistics. German data useless.
U.K, France as Treatment with Innovation
Canada as control without Innovation
Share of Raw Hide imports from U.S. as dependent variable.
Difference-in-Difference-in-Difference Estimation on shares.

74. 3D Estimation

75. Table 4 – A Quasi Experiment
Dependent variable is sit I II
III IV V
i={Canada, France ,UK}
France Intercept
-.33
.24
(2.24)
(1.83)
UK Intercept
1.24
.67
Europe Intercept
.46
.47
.60
(1.67)
(1.46)
(1.42)
Canada Intercept
91.12 a
91.08 a
90.73 a
(2.06)
(2.05)
(2.03)
(1.57)
(1.41)
France Time
.09
.04
.07
(.19)
(.11)
(.09)
UK Time
-.01
Europe Time
.03
(.15)
Canada Time
(.16)
Time
North Treatment
1.07
1.10
(2.51)
(2.49)
(2.47)
(2.16)
South Treatment
4.80a
4.81a
4.38a
(1.71)
(1.70)
(1.68)
(1.65)
R² adjusted
.99
RMSE
4.67
4.63
4.60
4.56
4.53
No. Obs 66

76. The chart above shows the the implied buffalo hide imports into France from the US as well as a 95% confidence interval. The confidence interval is constructed by taking a 95% confidence interval around the predicted US import share into France.

77. The chart above shows the the implied buffalo hide imports into the UK from the US as well as a 95% confidence interval. The confidence interval is constructed by taking a 95% confidence interval around the predicted US import share into the UK.

78. Summary
Data used is different – imports, raw hides, from the U.K and France.
Method of estimation is different.
Results are virtually identical. Large exports of buffalo hides over right time period.

79. Who killed the Buffalo? Tanning Innovation created in Europe
Robust demand comes from Europe
Are Europeans responsible for the most shameful event in US Environmental history?

80. Not quite! US policymakers are complicit but not causal.
Railroads were helpful but probably not critical.
New rifles helped, but hunt led to new rifles not the reverse.
Little evidence that environmental change or native over hunting did much at all.

81. Conclusion
Standard accounts of the “Slaughter on the Plains” are incomplete.
Empirical evidence strongly in favor of the export driven slaughter explanation.
Economics is a powerful tool for understanding the world.

82. Relevance for Today
World Fisheries – little control over catch in international waters, subsidies to fleets
Deforestation – poor property rights over land in many developing countries.
Wildlife – poaching and lack of property rights to elephants, rhinos, etc.

84. U.S. Share of Raw Hide Imports
Table 3 – Summary Statistics
U.S. Share of Raw Hide Imports
Country
Mean
Median
Std. Dev.
Min.
Max.
No.Obs.
Canada
91.5
93.1
6.6 70 97 22
France
2.9
1.7
3.3
.03
13.4 UK
3.4
1.6
3.9
.11
13.6