Selling Out the Red Man: American Advertisers Portray the Natives
A couple of interesting points:
1) The stereotypes we're familiar with today hadn't coalesced into convention then. At least half the images used a different set of stereotypes. These Indians were bald with a few feathers somehow rising from their heads. They had big ears and noses with rings in both. They were shirtless but covered with loosely draped robes rather than buckskin.
To me the key is the rings in the noses--a classic trait of black "savages." My guess is the artists were trying to make the Indians look as much like the dark, scary Africans we were "discovering" around the same time. As we learned from countless jungle movies, cartoons, and comics, these devils liked to boil people alive before eating them.
Long-haired Indians on horseback didn't necessarily have the "savage" cachet we associate with them now. The artists apparently reckoned that modeling Indians after Africans who were subhuman ape-men and cannibals would maximize the horror. Now these pseudo-Indians just look comically wrong.
2) Even then people understood the connection between stereotypes in the media and people's perceptions. How could they not, since it's self-evident?
Dime novels were the main form of mass entertainment then. They fed people, especially youngsters, a steady diet of titles such as "Ike the Indian Killer." This convinced people that Indians were relentless marauders and killers. Children grew up with these beliefs and stuck with them in the face of contradictory evidence.
The same thing happens today, of course. The funny thing is how some people (e.g., "Public" Causes Stereotypes? and Valenti: Movies Are Just Movies) try to deny it. In the 19th century, Americans understood that stereotypes came from the media and influenced people's perceptions. How stupid do you have to be not to realize this 150 years later?!
This also contradicts the notion in Stereotypes Are Irrational But Normal and Stereotypes Okay in "Cultural Commons"?--that stereotypes are somehow a natural part of life. Wrong. The media created these stereotypes and force-fed them to the public for political and cultural reasons. Without this force-feeding, the stereotypes probably wouldn't exist. And people would see Indians as different but not necessarily inferior or evil.
For more on the subject, see Stereotypes Drive Racism in South Dakota, Why Minstrel Shows Are Wrong. For more on the subject in general, see A Brief History of Native Stereotyping and The Harm of Native Stereotyping: Facts and Evidence.