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This document (link below) does not contain any additional information on the cut-off of the KVR from the Penticton Indian Reserve #1.  But it does contain some background on the relationship between the Okanagan bands and the Department of Indian Affairs (DIA) circa 1900. Some might find this interesting reading.

Another element in the breakdown of peaceful and progressive life on Okanagan reserves was the increasing influence of the DIA bureaucracy, which gradually broadened and strengthened its control over nearly all aspects of reserve life. The DIA was instrumental in destabilizing Indian village politics, [...] Okanagan chiefs became little more than clients of the local agents, and if they offered competition or acted independently, they were summarily deposed. In each era, the dominant European institution buttressed chiefly authority and manipulated chiefs to achieve its goal, whether that goal was making corporate profits, attaching the Indians to the church, or building a bureaucratic feudal empire. In these unequal relationships, support for chiefs lasted only as long as they remained useful and compliant.

THE RESPONSE OF OKANAGAN INDIANS TO EUROPEAN SETTLEMENT by Duane Thomson

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