The Fort Laramie Treaty of 1868 defined the Great Sioux Nation as including all the lands from the Nebraska line to the 46th parallel between the Missouri River and the 104th degree of longitude. The entire Black Hills  region was encompassed by this definition. White residents of the Dakota Territory were unhappy with the treaty. It had always been assumed that there might be a great deal of mineral wealth in the region, and, as early as 1872, the editor of the Sioux City newspaper began publishing stories about the prospects for gold in the hills and openly soliciting recruits for an expedition.
The expedition didn’t happen, thanks to military commands to abandon the project, but support for an excursion into the hills clearly existed in high levels of government. The secretary of the interior openly proclaimed that the Black Hills were not necessary to the happiness and prosperity of the native peoples.
Not all of the Native Americans in the Black Hills region agreed to sign the 1868 treaty and so it was decided that an exploratory expedition should head into the hills, ostensibly searching for a good location for a military post. Lieutenant Colonel George A. Custer was assigned to command the enterprise.
The Custer Expedition set out for the hills in July 1874. It was an unusual expedition from the get-go. Over a thousand military troops were part of the group. Native scouts, newspaper correspondents, miners, a scientific corps, a musical band, and many civilian employees were included in the expedition’s roster of personnel.
The expedition never reported on a good location for a military post, but it did report the discovery of gold in the hills. Dispatches confirming the presence of gold in the Black Hills were sent in early August. By August 12, the news of gold in the Black Hills was released to the general public.
The first few gold-seeking parties were escorted out of the Black Hills by the military. But the trespassing prospectors came from all directions and by 1875 at least 800 miners had eluded the government patrols and were in the Black Hills. While the military was trying to keep the prospectors out, local white communities to the east were demanding that the hills be opened to white settlers. The government decided to open negotiations for the cessation of the Black Hills and arranged for a delegation of chiefs to visit the capital in 1875. The chiefs refused to agree to give up the Black Hills and returned home.
Despite the native people’s refusal to give up their lands, the government held a grand council with the tribes in late 1875 and offered $400,000 annually for mining rights to the hills, or, alternatively, $6 million for the outright purchase of the land. The offer was refused. The government’s response was to withdraw the cavalry from the hills, essentially allowing trespassers free access to the hills. Instead of stopping provision trains from carrying food and supplies to the mining camps, the freighters were advised to arm themselves against hostile natives. The result of that decision was to begin another round of Indian Wars.
In late 1875, continual skirmishes with the native people were occurring in the Big Horn Mountain and Powder River regions of Wyoming, to the north and west of the Black Hills . Military leaders decided that the appropriate action would be a show of force that would bring the native people into the agencies. General Crook initiated a campaign against the native people in early 1876 from Fort Fetterman in Wyoming, heading for the Powder River country with only 900 troops. After an unsuccessful attack against a band of Cheyenne and a band of Oglalas under the leadership of Lakota warrior Crazy Horse, General Crook and his troops returned to the fort with plans to wait until spring before taking further military action.
As spring approached, an attack strategy was designed to overwhelm the native people with three columns of troops, one led by General Crook, heading north from Fort Fetterman, one led by Colonel Gibbon, heading south from Montana following the Yellowstone River, and one led by General Terry, moving west from the Little Missouri. Serving under Terry, Lieutenant Colonel George A. Custer was in command of the Seventh Cavalry.
The plans led to disaster as Custer did not wait for Crook and Gibbon to arrive once he discovered the native camp. He divided his small army into three segments, keeping just 223 men by his side. While the other two segments of his command had to retreat from their attack positions and were able to join up, they were not able to go to the aid of Custer, whose forces were completely annihilated. Known as “Custer’s Last Stand,” it was the last of the major battles to be won by Native American forces.
Offensive attacks against the Sioux resumed in August. At several of the agencies, friendly native people were disarmed and their ponies were removed as a preventative measure. Led by Crazy Horse, two-thirds of the Lakota, who had taken part in the Battle of Little Big Horn, spent the winter of 1876–1877 in the Powder River area. The military alternately skirmished and attempted negotiations.
In February 1877, the military went to Spotted Tail, a chief at one of the friendly camps that had not been disarmed, for assistance. Spotted Tail convinced many of the native people to surrender. Some headed into Canada under the leadership of Sitting Bull, but by May 1877, nearly 4,500 native people went to the agencies. Crazy Horse and his band were the last to return. They went to the Red Cloud Agency, where Crazy Horse was killed when he resisted being placed in confinement.
The tragic events of the 1876 battles gave Congress the power and popular support to pass an appropriations bill that dictated that the Sioux would not receive any further appropriations unless they gave up the Black Hills . Commissioners, carrying the new agreement, went to several agencies of the Sioux, who, without horses or weapons, gave in. Under the terms, the Sioux sacrificed the Black Hills and all hunting rights in Montana and Wyoming. In lieu of money, the government committed to providing rations for the native people until they could support themselves.
The tribes were to be relocated to reservation lands. Many of those that had previously surrendered fled north to join Sitting Bull in Canada. Of those that remained, Spotted Tail’s band relocated to Rosebud Creek and the Oglala Lakota picked their site at Pine Ridge , a few miles north of the Nebraska border.