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French trade and intertribal warfare

Late in the 17th century, the Dakota entered into an alliance with French merchants. The French were trying to gain advantage in the struggle for the North American fur trade against the English, who had recently established the Hudson's Bay Company. The Ojibwe, Potawatomi and Ottawa bands were among the first to trade with the French as they migrated into the Great Lakes region. Upon their arrival, Dakota were in an economic alliance with them until the Dakota were able to trade directly for European goods with the French. The first recorded encounter between the Sioux and the French occurred when Radisson and Groseilliers reached what is now Wisconsin during the winter of 1659–60. Later visiting French traders and missionaries included Claude-Jean Allouez, Daniel Greysolon Duluth, and Pierre-Charles Le Sueur who wintered with Dakota bands in early 1700.

The Dakota began to resent the Ojibwe trading with the hereditary enemies of the Sioux, the Cree and Assiniboine. Tensions rose in the 1720s into a prolonged war in 1736. The Dakota lost their traditional lands around Leech Lake and Mille Lacs as they were forced south along the Mississippi River and St. Croix River Valley as a result of the battles. These intertribal conflicts also made it dangerous for European fur traders: whichever side they traded with, they were viewed as enemies from the other. For example, in 1736 a group of Sioux killed Jean Baptiste de La Vérendrye and twenty other men on an island in Lake of the Woods for such reasons. However, trade with the French continued until the French gave up North America in 1763. Europeans repeatedly tried to make truce between the warring tribes in order to protect their interests.

One of the larger battles between the Dakota and Ojibwe took place in 1770 fought at the Dalles of the St. Croix. According to William Whipple Warren, a Métis historian, the fighting began when the Meskwaki (Fox) engaged the Ojibwe (their hereditary enemies) around St. Croix Falls. The Sioux were the former enemies of the Meskwaki and were enlisted to make a joint attack against the Ojibwe. The Meskwaki were first to engage with the large Ojibwe war party led by Waubojeeg: the Meskwaki allegedly boasted to the Dakota to hold back as they would quickly destroy their enemies. When the Dakota joined the battle, they had the upper hand until Sandy Lake Ojibwe reinforcements arrived. The Dakota were driven back and Warren states: "Many were driven over the rocks into the boiling floods below, there to find a watery grave. Others, in attempting to jump into their narrow wooden canoes, were capsized into the rapids". While Dakota and Ojibwe suffered heavy losses, the Meskwaki were left with the most dead and forced to join their relatives, the Sauk people. The victory for the Ojibwe secured control of the Upper St. Croix and created an informal boundary between the Dakota and Ojibwe around the mouth of the Snake River.

As the Lakota entered the prairies, they adopted many of the customs of the neighboring Plains tribes, creating new cultural patterns based on the horse and fur trade. Meanwhile, the Dakota retained many of their Woodlands features. By 1803, the three divisions of the Sioux (Western/Eastern Dakota and Lakota) were established in their different environments and had developed their own distinctive lifeways. However, due to the prevalent cultural concept of thiyóšpaye (community), the three divisions maintained strong ties throughout the changing times to present day.