Indigenous Peoples contributed many ways in which the various peoples native to North and South America contributed to the modern world's culture, manufacturing, medicine, markets, and other aspects of modern life. Author David Wilton argues in his 2004 book Word Myths: Debunking Linguistic Urban Legends that the concept of an "Indian gift" arose when white settlers misinterpreted the Native American concept of bartering: "To an Indian, the giving of gifts was an extension of this system of trade and a gift was expected to be reciprocated with something of equal value. Europeans, upon encountering this practice, misunderstood it, considering it uncouth and impolite. To them, trade was conducted with money and gifts were freely given with nothing expected in return. So this native practice got a bad reputation among the white colonists of North America and the term eventually became a playground insult."
This definition stuck and the phrase "Indian giver" made its first appearance in linguist John Russell Barlett's Dictionary of Americanisms in 1848. Even now, in 2013, the dictionary definition of the phrase only deems it sometimes offensive. While it's always startling to discover ingrained racism in the dictionary, even more jaw-dropping is the definition from 1962's Dictionary of Word and Phrase Origins by William and Mary Morris. So an Indian giver is, in a youngster's own language, only a 'pretend giver.'"