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Prior to an 1864 treaty, the federal government had granted the Klamath more than 20 million acres. By the 1950s, that reservation had been reduced to 1.3 million acres in Oregon. However, the tribe was still largely financially independent due to the reservation’s natural resources of farmland and timber. Tribal members shared revenue from the use of their land and lived modestly. Previous treaties had guaranteed annual payments to the tribe in exchange for their acceptance of provisions reducing the size of their reservation as well as hunting and fishing rights on area lands. As a result, most Klamath had grown financially dependent on the federal government and the distributions of income paid from the use of their lands. Termination threatened to end the reservation system completely in favor of a lump-sum payment to tribal members. Advocates of termination pressured the Klamath and even spread misinformation asserting that they might lose everything if they did not accept the lump-sum payment.
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In 1954, the government agreed to purchase the reservation for $90 million and end federal recognition of the tribe and cease all future payments to tribal members. This proved to be a financially shrewd move on the part of the government, given revenues in excess of $200 million the federal government received for the use of these lands in subsequent years. Some of the Klamath invested their share of the federal payoff wisely. Many others had little knowledge of finance and quickly spent or were swindled out of their money. The result was a tremendous increase in alcoholism, juvenile delinquency, and abject poverty. For many historians, termination represented the modern-day equivalent to the Dawes Act and its destruction of native communities and transfer of native lands to the federal government and land speculators.