A funding dispute between the province of Quebec and the federal government ended uncertainty about the status of the Inuit at least in administrative terms. Ottawa had resisted taking full responsibility for the Inuit. In 1920, the Indian Act had been amended to include them, but there was a reluctance, voiced by Conservative prime minister Arthur Meighen, to impose upon them the regime that had so obviously undermined other Native peoples. Control was transferred to the Northwest Territories council in 1927, but this did not resolve the troubling question. Indeed, when faced with the support of the Inuit in its north, Quebec resorted to the courts to get Ottawa to take up its responsibilities. In a case called Reference re Eskimos, decided in 1939, the Supreme Court determined that the Inuit were, for administrative purposes at least, to be considered as Indians under the British North America Act. (This decision was based on the understanding of how they were viewed at the time of Confederation.) This did not result in the application of the Indian Act to them, but did resolve the question as to who was ultimately responsible for their welfare.

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