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TRANSITIONS &endash; Journal of The Lands Council
The Lands Council is a non-profit organization dedicated to the transition of the greater Columbia River ecosystem from resource exploitation to long-term community and biological sustainability.
Founder
By John Osborn, M.D., Coordinator, Railroads & Clearcuts Campaign
We have forgotten.
We have forgotten the history of our public lands, of our homestead era.
We have forgotten that ten percent of the country was entrusted to railroad corporations created through our state and federal legislatures.
The land grants were legislated contracts not a 200-million-acre gift to corporations.
These laws gave rise to huge, serpentine swaths of grant lands sweeping across landscapes of the West, Midwest, and South. Title was not meant to rest with corporations, but to pass through to American settlers. By selling these federal lands to homesteaders, the railroads were to raise capital for constructing and maintaining the nation's railroad systems.
The railroad land grants were intended to promote the public interest and welfare.These laws had specific objectives: establishing a national rail transportation system, distributing to homesteaders lands taken from Indians, and hauling the military and mail at reduced rates.
These laws have been broken. Lands were sold to huge corporations rather than to homesteaders. Funds raised by the land-grant subsidies have been diverted to non-rail enterprises like timber and mining. Railroads have not been maintained in good working order: both passenger and freight service are poor to nonexistent.
We have forgotten the time-honored remedy for major land-grant violations: forfeiture or revestment back to the public.
As a society, we have tried to address contemporary problems arising from the railroad land grants. We have been placing band-aids over the gaping wounds left by the land-grant corporations: the export of logs and the American jobs that those logs used to support; forests and fisheries pushed to the brink of survival by rampant over-cutting; migratory timber companies that cut and run leaving behind devastated communities and plundered landscapes.
Attempts to treat contemporary problems arising from the railroad land grants are directed at symptoms and not the underlying pathology. Fundamental reform of the railroad-land-grant laws will come only after open debate about America's land-grant policy. Our nation has held this debate many times. The time has come to engage in this debate again.
In the past, forfeiture of land grants was not unusual. In the span of 75 years, 26 railroads forfeited more than 40 million acres: a quarter of the total grant lands. Revestment back to the public was recognized as a right to remedy corporate abuses and the illegal and wrongful concentration of the landed wealth of the United States into the railroad empires and their successor corporations. People have long been willing to use these rights of revestment to battle corporate wrongs.
The questions we struggle with today were struggled with during America's homestead era: What is the role of our government in protecting the public interest? What are the proper political and economic roles of corporations? What is the proper balance between property rights and the public interest?
Congress created the land grant railroads, and Congress can amend the land grant laws as it has many times before by revesting these stolen lands.
Our elected officials act in the public interest when there is broad-based support for action. Farmers, populists, conservationists, anti-monopolists, financial reformers, and local governments have allied themselves before, and can do so again today. For the sake of our future, we must not forget our past.
By Eric Pryne, Seattle Times staff reporter
After studying the 1864 Northern Pacific land grant on and off for a decade, Spokane environmentalist John Osborn has arrived at a sweeping conclusion:
It is the root of all evil, the font of just about every problem that besets the Northwest's forests today. "You cannot understand the Northwest forest crisis without understanding the Northern Pacific land grant," Osborn says.
He suggests an equally sweeping solution: take it back.
That's right. Osborn, a physician who heads the Spokane-based Inland Empire Public Lands Council, contends Congress could, and perhaps should, reclaim, or revest, millions of acres it gave to Northern Pacific in 1864.
The 40 million-acre land grant was the foundation of several Northwest timber empires. Northern Pacific begat Burlington Northern, which in turn begat Plum Creek Timber Co., still a major forest landowner in the central Cascades, northeastern Washington, Idaho and Montana.
"Enormous corporate forces"
Weyerhaeuser got its start in Washington with 1 million acres purchased from Northern Pacific in 1900.
"Congress unleashed enormous corporate forces on the Northwest," Osborn says. "Congress retains the authority to rein in those forces."
Plum Creek, not surprisingly, disagrees. It contends it and others who bought the railroad's lands own them outright, that Congress holds no more power over them than any other private property.
Osborn has been talking up the revestment idea for years, without attracting much attention or support in Congress. His organization plans to publish a book on the land grant soon; Osborn hopes it will spur greater interest.
Osborn contends Northern Pacific violated conditions that Congress imposed when it approved the land grant. The federal government leveled the same charge 65 years ago.
At President Calvin Coolidge's urging, Congress ordered the attorney general to take Northern Pacific to court. Years of complex litigation produced an inconclusive U.S. Supreme Court ruling and, ultimately, an out-of-court settlement in 1941.
Case closed, says Plum Creek.
The company also points to a 1983 federal appeals-court ruling, which concluded that Northern Pacific, by building the railroad, had fulfilled the only condition Congress imposed.
"We don't think there's any legal basis (for revestment)," says Bob Manne, executive vice president. "I can't get too excited about it."
A different opinion
But Osborn argues the 1941 settlement and the 1983 ruling aren't as sweeping or binding as Plum Creek contends they are. The 1864 law explicitly permits Congress to alter, amend or repeal the land grant, he notes.
In 1916 Congress took back Oregon lands it had given earlier to a railroad, finding the company had violated the grant's terms. Perhaps, Osborn says, Congress should consider similar action against Northern Pacific's heirs.
Charlie Raines, a Seattle Sierra Club leader who heads a campaign to acquire private checkerboard lands in the central Cascades, has read Osborn's work. Osborn may have a case, Raines says.
But he questions the value of pursuing it.
"It would take 10 years to get anywhere," Raines says, "and by then everything we're concerned about would be cut."
I now wish to prevent a perpetual monopoly of over
50,000,000 acres of lands by an immense railroad company ...
I hope that the American Senate ... will not by their action here
to-day cause their posterity to curse their memories for thus
building up such an immense monopoly to the detriment of the country,
to the oppression and injury of all who may settle in that region.
U.S. Senator Howell, arguing against additional subsidies to the Northern Pacific Railroad, in 1870.1
The possibilities of power involved in such a concentration of land ownership, irrespective of the timber, hardly require discussion. The danger of abuse of that power, in the absence of restrictive regulation, is obvious. This danger, moreover, is greatly increased because a few of the largest owners of this land also occupy dominating positions in railroad transportation over great sections of the country.
U.S. Bureau of Corporations, 1913-14.2
The historian is less interested in whether the government drove a sharp bargain than he is in the fate of the 174,000,000 acres of Federal land and the approximately 49,000,000 acres of state lands which were offered to the railroads.
Historian David Maldwyn Ellis, 1946.3
The lesson of the railroad land grants after more than one hundred years is that the government has been incapable of dealing affirmatively and at arms length with powerful economic interests.
Attorney Sheldon Greene, 1976.4
1 Quoted in U.S. Congressional hearings on the Northern Pacific
Railroad, 1924-1928, p. 4683-4684.
2 In its report on The Lumber Industry, Vol. 1, p. 29.
3 Ellis, 1946.
4 Greene, 1976, p. 725.
show that as long as the "unintended empires" of the railroad land grants continue to exist, the political, socioeconomic, and environmental controversies will also continue, as will options for taking remedial action by revesting the lands back to the public.
Soon after the Revolution, the American government began transferring much of the continent into private ownership. More than a billion acres was given or sold to war veterans and other individuals for their service to the nation, granted to states for developing their education and transportation systems, to individuals for homesteading, and to corporations to develop water, timber, and mineral resources for the nation.
Laws passed to transfer public lands to private hands included the Land Act of 1796, the 1841 Preemption Act, the 1862 Homestead Act, the General Mineral Law of 1872, the Desert Lands and the Timber & Stone Acts in the 1870s. The laws did succeed in rapidly giving away the bulk of public lands, though not always, as we shall see, to the public. By the late 1880s, the land laws were being revised or repealed, because the end was in sight for the disposal of America's public lands.
As attorney and land reformer Sheldon Greene has described, "During its first one hundred years, the work of the United States was to take possession of its land. The colonization and territorial expansion of the United States were, simply put, a colossal land rush."5 Such a transfer of wealth was not accomplished without speculation, greed, and outright fraud. Throughout much of the settlement and preemption and homestead eras, corruption in land dealings was the rule, rather than the exception. The head of the U.S. General Land Office, the agency which disbursed federal lands, estimated that in 1883 fraud accounted for 40 percent of the 5-year homesteads, 90 percent of the timber claims, and 100 percent of the Preemption and commuted Homestead claims.6 A 1910 survey estimated that 90 percent of the preemption and homestead land in Wisconsin had actually been acquired for timber.7 In the 1880s, "the going rate for dummy entrymen ranged from $50 to $125; you could buy a witness for $25."8
Greed and waste so characterized the era that it was dubbed "the Great Barbecue." The disposal of the public domain was inextricably tied to the Gilded Age, the Robber Barons, the Wild West, and the other great myths of the American industrial age, and to the dramas and problems that they encompass. Many of these dramas are still being played out across the country today.
It is the purpose of this paper to outline the successes and failures of the movement to revest the railroad land grants, and to
One of the most controversial of the public lands "disposals" was the railroad land grants, a series of federal and state acts between 1850 and 1871. The ostensible purposes of the railroad land grants were to build the transcontinental railroad and telegraph systems, and to help settle the West. The railroad corporations, often federally-chartered public corporations, were in effect to be agents of federal and state public lands policies.10 The railroads, rather than the U.S. General Land Office, as was usually the case, would sell the land to settlers, and use the money raised to pay for the construction of the national transportation and communication systems. Besides these public sale provisions, there were other conditions placed upon the land grants, including constructing the railroads within a specified period, providing railroad service in perpetuity, and hauling military and postal freight at reduced rates.
The nature, magnitude, and implementation of the land grant program was debated hotly for many years. Proponents of the land grants included the arguments that the nation needed military roads for the Indian wars and the Civil War. The West was a wilderness needing to be settled and developed. People needed land, but Western land was worthless without opening by the railroads. Land grants were the only way to fund railroad
6 Seventy-five years later, a public lands historian wrote that "historians have never discredited these estimates, nor . . . even challenged them" (Le Duc, 1950).
7 Fries, 1951, pp. 176-177 and 179; citing U.S. General Land Office (GLO) Annual Report, 1877, p. 35. From 1885 to 1888, during the brief tenure of GLO Commissioner William Sparks, only a quarter of the land was fraudulently claimed.
8 Steen, 1991, p. 24, citing Ise, 1920, pp. 74-75; and GLO Annual Report, 1886, pp. 95, 200,213. "Dummy entrymen" were individuals who would apply for homestead lands and then turn them over to timber, mining, real estate, or other corporations.
9 U.S. Bureau of Land Management, 1986; and Ellis, 1946, in Carstenson, 1963, p. 146.
10 This status has been upheld in the courts. For example, the U.S. Supreme Court has declared that "the interest that the granting acts conferred upon the railroad was $2.50 per acre," and the right to sell at that price were only "aides to the duty of transmitting the land to settlers" (Oregon and California R. Co. v. U.S., 243 U.S. 549 (1917).
Adapted from Gates, 1968.
1883 Celebration at Gold Creek, Montana, marked the completion of
Northern Pacific's main line. NP's president, Henry Villard, poses on
the locomotive.
construction, and the U.S. would not lose any money by granting half its land and selling the other half for twice the price. Opponents of land grants argued that the railroads should not be subsidized with public resources, and that the government would lose revenues from its public land sales program. The land grants were far in excess of what was needed to secure construction of the railroads, and would result in corporate monopolies of land and resources.11 Even as the debate continued, the land grants began to be legislated, with opponents managing to include what were thought to be safeguards against mismanagement or abuse.
Prior to 1862, the grants were made via the state governments; nine states granted almost 49 million acres in railroad land grants.12 In 1862, with the advent of the interstate transcontinental railroads, the federal government began making the grants directly to railroad corporations. Table 2 shows the largest of the land grants.
Three quarters of all railroad grant lands were eventually gathered under the four railroads: the Northern Pacific (40 million acres), Santa Fe (15 million acres), Southern Pacific
12 Ellis, and 1946, Comment; and 1946, Forfeiture, p. 28, citing U.S. Federal Coordinator of Transportation, 1938-1940.
13 Root, citing Wilner, 1981.
The railroad land grants covered ten percent of the continental United States, yet because of the corridor and checkerboard patterns of the grants, their influence extends considerably beyond that. One historian estimates that railroad corporations controlled the settlement of a third of the country, and an even greater portion of the American West, where most of the land grants were located.15 Even today, the largest land owners in many Western states are still the land grant railroads and their corporate heirs.16 Much of the land has been sold to or spun off into new corporations, and the legacy of the nineteenth century railroad land grants is a remarkable and troubling concentration of land ownership and exploitation of natural resources which was never intended by Congress. 17 Control of the grant lands has and continues to translate into economic and political power for the corporations which control them.
As with most of the public lands disposal, the railroad land grants were rife with pork barrel politics and fraud. Actions committed in order to evade the provisions of the land grant, or to defraud the government, the public, and/or railroad shareholders, included:
Some of these problems surfaced in the decades after the grants had been made and the railroads had been constructed; others continue after more
14 Ellis, 1946, Forfeiture, p. 29, citing U.S. Board of Investigation and Research, 1944.
15 Shannon, 1946.
16 California (Southern Pacific Railroad, Sierra Pacific, Catellus), Montana (Plum Creek Timber, Great Northern Coal Properties), Washington (Weyerhaeuser, Plum Creek). BNSF, UP and other railroads also hold hundreds of thousands of acres of prime industrial and commercial real estate in the cities along their tracks.
17 Again, the U.S. Supreme Court, in its litigation with the Oregon & California Railroad, has clarified what was transferred: the right to sell the land, not the land itself nor the timber, minerals, or other resources upon it (Oregon and California R. Co. v. U.S., 243 U.S. 549 at 552 (1917).
18 See Crawford, 1928, p. 100; and Bederman, 1988.
19 The Northern Pacific's techniques of promotion and propaganda are analyzed in Mickelson, 1940.
20 A rail system, being a transportation utility built with public lands and monies, should not necessarily abandon unprofitable lines, but maintain them in the public interest.
21 Goodwyn, 1978.
For a variety of reasons, ranging from lack of capital, rough terrain, bad weather, engineering problems, labor problems, repeated bankruptcy, mismanagement, corruption, and outright fraud, many of the railroads were not built as planned: in fact, forty of the seventy land grant railroads missed their construction deadlines.23 For example, the Northern Pacific, having missed its deadlines repeatedly, took twenty years (1864 to 1883) to build, and was still making claims for grant lands in 1940.
In the end, after the construction failures, financial collapses, lawsuits, and forfeiture and revestment acts, only three-quarters of the total land grant acreage offered was actually transferred to the railroads.24 Slightly more than 131 million acres of federal land,25 and almost 49 million acres of state land,26 were eventually transferred to 61 railroads, including 25 percent of the land in Washington and Minnesota, 20 percent of Wisconsin, Iowa, Kansas, North Dakota, and Montana, 14 percent of Nebraska, and 12 percent of California.27
Between 1867 and 1890, about 35 million acres were forfeited by 20 railroads back to the federal government because of the railroads' failure to fulfill their land grant requirements.28 In 1916, two million acres were revested from the Oregon and California Railroad. In 1929, the Northern Pacific Railroad lost its claim to an additional three million acres. In 1941, about eight million acres of additional land claims were released by the railroads, which in exchange were released from their contract to give the government discounted rail rates.29 In the conventional wisdom, the railroad land grant era was over.30 But by tracing the history of forfeiture, and examining its accomplishments and failures, we will see that the land grant legacy is very much alive.
22 Many of these forms of fraud are illustrated by studying the Pacific and Northern railroad lines. For a summary discussion of the Oregon & California Railroad case, see Jones, 1973. The sensational Oregon land fraud trials are described by Messing, 1966. For the original and exhaustive accounts of the Union Pacific and Central Pacific Railroads, see the Pacific Railroad Commission hearings (50th Cong., 1st Sess., Exec. Doc. 51). The epic battle for Northern Pacific Railroad is described in the 1924-28 Joint Congressional Committee hearings (U.S. Congress, Joint Congressional Committee on the Investigation of the Northern Pacific Railroad Land Grants, 1924-1928, Hearings), and in the trial of 1930-1940 (Supreme Court decision in U.S. v. NP, 311 U.S. 317) and the 1941 settlement (U.S. v. NP, 41 F. Supp. 273).
23 Ellis, 1946, Forfeiture, p. 30.
24 Land grant railroads "forfeited" their claims to lands when they violated their legislative contracts; the government "revested" the land, that is, took it back, either for sale to the public, or for reservation purposes.
25 Ellis, 1946, Comment.
26 Ellis, 1946, Comment., p. 145.
27 Petulla, 1977, p. 184.
28 Ellis, 1946, Forfeiture.
29 Various estimates have been made of the value of the grant land versus the value of the reduced freight rates (see Mercer, 1982; Henry, 1946, and Henry's critics, in Carstenson, 1963). All of the estimates seem low by several orders of magnitude, given the current market value of over $50 billion just for the largest of the land grant railroads (Burlington Northern Santa Fe and Union Pacific) and a few of their timber, mining, and oil and gas spin-offs (UP Resources, Catellus, Santa Fe Energy Resources, Santa Fe Pacific Gold, Sierra Pacific Industries, Weyerhaeuser, Boise Cascade, and Potlatch). This author's estimate of current market value was compiled from 1997 corporate annual reports and Fortune magazine).
30 The "conventional wisdom" is often promulgated by railroad employees and partisans (for example, Root, Wilner, and Cotroneo). But the power of the railroads' propaganda can be gauged by the fact that even critical historians, such as Ellis and Gates, have made statements to the same practical effect, though their apparent understanding and analyses contradict. Some historians (such as Shannon, 1946) and analysts (such as Greene), have tended toward the more radical view that public lands ought to be public.
The construction of the land grant legislation turned out to be a bigger challenge than the construction of the railroads. Given the ineptitude and collusion of the U.S. General Land Office,31 Congress, and the courts, the public's ambivalence toward corporations, the near-universal desire for private property, the confusion between the nature of private and corporate property, and the widespread beliefs in "manifest destiny" and the inexhaustibility of the frontier and its resources, it is no surprise that the land grant policy was troubled from the beginning.
There were debates over the propriety and magnitude of federal subsidies to corporations for building public roads. While there had been land subsidies for canals for decades, the railroad enterprise dwarfed the canals. Not everyone had equal enthusiasm for building thousands of miles of rail lines through the wilderness of the West. The debate over the need for the railroads was mixed with debates over states' rights and the nature of interstate commerce. Intertwined with these questions were the regional disputes of the 1850s, which stalled Congress's selection of the general routes of the railroads. With the onset of the Civil War, the Southern delegation left Capitol Hill in the hands of Northern politicians. Not surprisingly, then, when Congress passed the 1862 Pacific Railway Act, the first transcontinental railroad was the Union Pacific rather than the Confederate Pacific. The Northern Pacific followed two years later.
Once a majority of Congress was persuaded that transcontinental railroads should be subsidized by the federal government, there were additional problems in the design and implementation of the subsidy policy. The land grant legislation itself was ambiguous and contradictory. It was poorly administered by the Interior Department, the General Land Office, and U.S. Forest Service, which often colluded with the railroad corporations to transfer excess land. There was an unclear and shifting jurisdiction between the legislative, administrative, and judicial branches, and all three branches alternated between indecisiveness and collusion.32
31 For critical discussion of the GLO, see Dunham, 1937 and 1941.
32 Even the U.S. Supreme Court was divided over the major issues in the Northern Pacific case, reserving certain issues for later resolution (U.S. v. NP, 311 U.S. 317 (1940)). The is also a body of literature on various federal judges' relationships with railroad owners: for example, Bederman, 1988; Frederick, 1991; and Swisher, 1930, chapter 9 ("The Octopus").
The pork barrel nature of many of the railroad projects, which seemed designed more to line private pockets than to build rail systems, became apparent early on. In some cases, land grants passed from corporate shell to corporate shell, without the roads ever being built. With a rising Populist movement threatening more than land grant forfeiture, a divided Congress finally began to recover some of the unearned land &endash; even before ending the handouts.
Arguments for forfeiture were based on the views that many of the railroads hadn't been built on time, or at all, or had abandoned unprofitable lines. The railroads were actually delaying settlement by withholding land they were supposed to sell to the public; the railroads should not be rewarded for their speculative holding of lands. The railroads received more land than they needed to construct and maintain the railroads; the excess should be returned to the public domain.
Opponents of forfeiture tried to defend the railroads, saying that the railroads had earned their grants, and the U.S. was responsible for fulfilling its part of the contracts. Revesting grant lands would deprive railroad stock and bondholders of their value. Many stockholders were widows and orphans."34 Some of the railroads claimed that the unsold lands should not be forfeited because the land grant legislation did not actually require them to sell their land, but only to "dispose" of it. Union Pacific Railroad mortgaged its lands to an affiliated corporation, and claimed that while the lands had not been sold to settlers they had been "disposed of," and so were not subject to forfeiture. The Supreme Court agreed in that case,35 but rejected that argument in the Oregon & California Railroad case.36 The Northern Pacific Railroad made a similar claim, that in its 1890s bankruptcy, it had "sold" the lands &endash; even though they were all sold to one of its own subsidiaries, the Northern Pacific Railway. Northern Pacific's land transfers to itself were also approved by federal courts.37
Forfeiture was not the only method used to try to enforce the public sale requirement of the land grants. Two other methods were the homestead clause and administrative action by the General Land Office. After 1866, land grants included a "homestead" or "actual settlers" clause requiring the sale of grant lands to actual settlers only, in maximum parcels of 160 acres, at a maximum price of $2.50 per acre.38 This clause was routinely ignored by many of land grant corporations, as well as by the administrative agencies and Congress. One of the most disturbing aspects of the land grant story is the continued failure of Congress to draft unambiguous legislation, and the failure of the administrative and judicial bodies to enforce the law. Occasionally, as in the Oregon & California case, violation of the settler clause did result in revestiture. But even in that case, the railroad was paid for the land (at the rate of $2.50 per acre, as specified in the land grant contract), and the illegal sales were allowed to stand.39
The public sale provision was reemphasized in 1870, when U.S. Representative William Holman of Indiana introduced a resolution declaring that the remaining public lands should be held for "the exclusive purpose of securing homesteads to actual settlers under the homestead and preemption laws.40 The House endorsed the resolution, but proceeded to grant another 20 million acres to railroad corporations in the next year.41
Holman became the shepherd of forfeiture legislation for twenty years. He introduced legislation throughout the 1870s and 1880s, and in 1884 sponsored a stronger resolution calling for the forfeiture of all expired land grants.42 He was also a principal participant in the compromises which led to the General Forfeiture Act in 1890.
34 This claim disregards the fact that then (as now), the overwhelming majority of stocks and bonds are held by a small percent of the population.
35 Platt v. Union Pacific R.R., 99 U.S. 48 (1878).
36 243 U.S. 549 (1916).
37 That is, they were approved by the bankruptcy court at the time, and later confirmed by the federal court in the U.S. v. Northern Pacific litigation (Findings of Fact and Conclusions of Law by Judge Webster, E. Dist. Wash., June 27, 1939).
38 Ellis, 1946 b, p. 37, citing Cong. Globe, 40 Cong., 2 Sess., 4428.
39 This was guaranteed through additional legislation, the Forgiveness Act or Innocent Purchaser's Act of Aug. 20, 1912, 37 Stat. 320.
40 Ellis, 1946, Forfeiture, p. 38, citing Cong. Globe, 41 Cong., 2 Sess., 2095.
41 Ellis, 1946, Forfeiture, p. 38.
42 Ellis, 1946, Forfeiture, p. 52ff.
The forfeiture of land grants began even before they were all handed out, and continued for 75 years. Twenty-six railroads lost 40 million acres. There were many reasons for forfeiture, and most of the forfeitures were enacted as separate acts. For simplicity, historian David Ellis has divided the land grant forfeitures into three periods, to which we may add a fourth and fifth.43
Period 1: 1867-1877: The Early Period of Forfeiture
The decade marked the end of the land grants and the beginning of forfeiture. Wholesale forfeiture was restrained by the wish to complete the railroad system, and by the fact that many grants did not expire until after 1877. Total forfeited: 650,000 acres.
By 1872, the Republican Party followed the Liberal Republicans and the Democrats in adopting a platform against additional land grants.44
In 1873, the Credit Mobilier scandal broke. The Credit Mobilier, a construction subsidiary of the Union Pacific Railroad, had bribed its way to success by giving shares of stock to the U.S. vice-president, the vice-president-elect, Congressional committee chairmen, a dozen Republican House and Senate leaders, and the Democratic floor leader. Millions in capital were missing, reportedly funneled into the Credit Mobilier. All this became public knowledge: "The members of it are in Congress; they are trustees for the bondholders, they are directors, they are stockholders, they are contractors; in Washington they vote these subsidies, in New York they receive them, upon the Plains they expend them, and in the Credit Mobilier they divide them... Under one name or another a ring of some seventy persons is struck..."45 Congress investigated itself, and censured a few of its members. UP stock fluctuated, manipulated by railroad financier Jay Gould, and the UP debt to the U.S. went unpaid. The affair left the public aware of and disgusted by financial and political manipulation on a grand scale.46
In the beginning, forfeiture was seen as an administrative matter in which the General Land Office could restore to the public the grant lands of a railroad which had failed to meet its construction
deadlines. In 1874, the Supreme Court's Schulenberg v. Harriman decision47 made forfeiture more difficult by ruling that it required Congressional action. "If the grant be a public one, it must be asserted by judicial proceedings authorized by law... or there must be some legislative assertion of ownership of the property for breach of condition." In other words, even when a railroad failed to comply with the land grant conditions (as they often did), the title to the land remained with the railroad if the government did not take positive action. Even when lawsuits or legislative actions were underway, the lengthy nature of these actions meant that the
44 Ellis, 1946, Forfeiture, p. 38.
45 Charles Francis Adams, in the North American Review, quoted by Brown, 1977, p. 181.
46 See also Crawford, 1890.
47 21 Wallace 44.
In 1877, the General Land Office urged Congress to either extend the construction deadlines or take action to forfeit the unearned grants. In that same year, a decade before the Northern Pacific forfeiture controversy reached its full height, Washington Territorial attorney general McGilvra urged the forfeiture of NP's Cascade branch.49
Period 2: 1877-1887: Major Period of Forfeiture
During this decade, while 21 million acres of grant land was reopened to settlement, many railroads managed to avoid forfeiture by continuing construction. Total forfeited: 28,000,000 acres.
In 1878, Representatives Joyce and Thurman introduced forfeiture legislation in the House; the Thurman bill forced the Union Pacific and Central Pacific to create sinking funds to ensure repayment of their debts to the government.51
Ever-creative, the railroads themselves used forfeiture as a
strategy against their rivals. For example, Henry Villard, who
controlled the Oregon Navigation and Railroad Company, pushed for the
forfeiture of the Northern Pacific's grant, until he gained control
of the NP in 1881.52 Subsequently another NP rival,
the
Central Pacific, pushed for the forfeiture of NP's grant in the 1882
Casserly bill.
In the early 1880s, Knights of Labor and the Greenback National Party urged forfeiture, and by 1884, both major political party platforms included forfeiture, though the Republican platform included a loophole for any railroad except those "where there has been no attempt in good faith to perform the condition of such grants."53
In 1883, the Knights of Labor urged forfeiture.
In 1883, the Senate Committee on the Judiciary suggested that the courts, rather than Congress, were the proper arena for forfeitures,54 but on January 21, 1884, the House passed, in a 251 to 17 vote, a resolution introduced by forfeiture champion William Holman. The resolution urged the recovery of all unearned grants, and gave priority to forfeiture bills on the congressional calendar.55
More than half of the 70 railroads were not built on time.By 1885, up to a hundred million acres of grant lands lay along late or non-existing track.56 These became the focus of the proposals for a general forfeiture act.
The U.S. General Land Office
The U.S. Department of Interior's General Land Office (GLO), as the administering agency for public lands, was a key to the failures and the forfeitures of the land grants. Created in 1800 to administer the transfer of public lands into private hands, the GLO was variously described over the next 150 years as underfunded, inept, and/or corrupt. It was at times all of those, and played a key role in the implementation of the homestead and land grant policies.
The GLO Commissioner's report for 1872 admitted that the agency's substandard salaries made the agency "merely a sort of training school for land lawyers and agents for railways and private land companies."57 The GLO training school had a revolving door which very well served those corporations. For example, both of the principals of the premier land law firm of Britton & Gray were former employees of the GLO, and their brothers-in-law were chief clerk and assistant chief of the GLO's railroad division.58 Britton & Gray represented the Atlantic & Pacific
49 New York Tribune, Dec. 21, 1877; Yonce, 1969, pp. 211ff; and Yonce, 1978.
50 Ellis, 1946, Forfeiture, p. 42, citing GLO Annual Report, 1888, p. 100.
51 Ellis, 1946, Forfeiture, p. 41. A sinking fund is an account into which regular payments are made and reserved for paying off debts.
52 Hedges.
53 Ellis, 1946, Forfeiture, p. 40-41.
54 Ellis, 1946, Forfeiture, p. 41, citing Senate Reports, 47 Cong., 2 Sess., No. 906: see also Donaldson, 1884, p. 536. The 1874 Schulenberg v. Harriman case had declared that forfeiture must be accomplished by judicial or Congressional action.
55 Ellis, 1946, Forfeiture, p. 41, citing Cong. Record, 48 Cong., 1 Sess., 547-51.
56 Ellis, 1946, Forfeiture, p. 30, citing GLO and Congressional reports of the time.
57 Rae, 1938, p. 212. The words are Rae's.
58 Dunham, H.H., 1937, citing Crawford, 1885.
The nemesis to the General Land Office's routine failures and collusion was William Andrew Jackson Sparks, a self-made attorney, federal lands office receiver, Illinois state representative and senator, and from 1872 to 1882, a U.S. Representative, where he was an advocate of railroad regulation. In March 1885, Sparks was appointed GLO Commissioner by Grover Cleveland. 60
Sparks found the state of affairs intransigent as well as unacceptable:
That the abuses of the public lands laws are largely due to inefficient administration, to the conduct of weak or corrupt officials, and to erratic and fanciful decisions, is undeniable; but that the laws themselves are defective in want of adequate safeguards is also true.62
The vast machinery of the land department appears to have been devoted to the chief result of conveying the title of the United States to public lands upon fraudulent entries under strained construction of imperfect laws and upon illegal claims under public and private grants.63
Within a month of being appointed GLO Commissioner, Sparks
suspended the transfer of homestead entries in 10
states.64 He recommended the repeal of preemption acts and
other public land laws; that cash sales should be stopped, and that
land should be made available to actual settlers only.65
Sparks also
abolished land lawyers' access to GLO clerks, thus making bribery and
threats more difficult.66
Sparks estimated that ten million acres had been claimed in excess of the land grant formulas,67 and in 1885 and 1886, he administratively revoked 97,000 acres of NP grant land in Washington state, and 1.5 million acres of Atlantic & Pacific Railroad grant in California, but he failed to recover another 90,000 acres from the A&P in Missouri.68
Sparks also went after lands fraudulently claimed by timber corporations.
© The Lands Council
59 Rae, 1938, p. 218. Britton & Gray argued that (even though the A&P had not fulfilled its end of the land grant contract) the A&P should not be held responsible for delays which were the fault of Congress. The GLO's decision can be found in Palmer vs. Atlantic & Pacific (GLO Annual Report, 1886, p. 30). The A&P forfeiture was followed by the GLO's 1887 order recapturing indemnity lands from many of the land grant railroads (see below).
60 Dictionary of American Biography, 1935, vol. 17, pp. 434-435.
61 1885 Annual Report, p 3.
62 Sparks' GLO Annual Report, 1885, pp. 218-219.
63 Sparks' GLO Annual Report, 1885, pp. 155-156.
64 GLO Annual Report, 1885, pp. 43, 196-198.
65 GLO Annual Report, 1886, p. 43.
66 Dunham, in Carstenson, pp. 187-188.
67 GLO Annual Report, 1885, p. 184.
68 Rae, 1936, pp. 299-301.
In his 1885 report, Sparks specifically mentions two corporations: the Sierra Lumber Company of California, and the Montana Improvement Company (MIC). In 1885, Sparks accused the MIC of cutting 45 million board feet from public lands, but the proceedings were dropped when the federal funds allocated to the case were exhausted.70 What followed was a convoluted series of transactions and corporate reorganizationsa pattern that has come to characterize the land grant's evolution. The MIC, actually owned by principals of the Northern Pacific Railroad and Amalgamated Copper, went through a series of reorganizations. Amalgamated Copper itself, which purchased a million acres of NP grant land in Montana in 1907, was soon reorganized as Anaconda Copper. In 1993, the Northern Pacific's timber spin-off, Plum Creek Timber, bought back much of the Anaconda grant land (which had since been owned by ARCO and then by Champion International). Plum Creek Timber currently holds title to more than 1.5 million land grant acres in Montana, 90 percent of the timber industry land in the state.
In 1885 and 1886, the two largest forfeitures were enacted by Congress: the Texas Pacific lost 15 million acres in New Mexico and Arizona, and the Atlantic & Pacific lost 10 million acres along uncompleted roads in New Mexico and California.71 In March 1887, Congress directed the Department of Interior (DOI) to adjust all the railroad land grants, a process which until then had been up to the discretion of the DOI. If upon the GLO's calculation, it was found that railroads had too much land, they would be asked to relinquish it; if they refused, the U.S. Attorney General was instructed to bring suit.72 In May 1887, the General Land Office (GLO) ordered railroads to show why their unselected indemnity lands should not be revoked, and in August 1887, the Interior Department restored 21,323,600 acres from the Northern Pacific, Southern Pacific, Oregon & California, and other railroads to the public domain.73
But public lands reform had its limits. In 1886, Sparks had attempted but failed to cancel 1.5 million acres of the Northern Pacific's land grant in Washington State. Much of this land was soon purchased by the Weyerhaeuser timber syndicate. Sparks continued to push, but his limits were soon exceeded, in another case involving Weyerhaeuser.
Sparks' calculation that the Chicago, St. Paul (formerly St. Croix) Railroad had an excess of 406,684 acres was rejected by Interior Secretary Lucius Lamar, who ruled that the railroad had a right to indemnity for 200,000 acres. Sparks again clashed with Lamar in 1887, ending hopes of a threatened suit against Weyerhauser over title to North Wisconsin Railroad indemnity lands.74 Having pushed as far as Cleveland's administration and the corporations would allow, the tension led to Sparks' forced
70 Toole and Butcher, 1968, pp. 354, 356, and 357, citing GLO reports and the Helena Independent Weekly; Rae, 1938, p. 17, citing GLO Annual Reports, 1885, pp. 311-312 and 1887, p. 83.
71 23 Stat. 337 (1995) and 24 Stat. 123 (1886).
72 24 Stat. 556, Mar. 3, 1887. See also Rae, 1936, p. 312.
73 Aug. 13, 1887, Land Decisions, VI, 1887-1888, pp. 85-91; Annual Report of the Secretary of the Interior, 1887, pp. 10-12; see also Rae, 1936, pp. 301-311.
74 Hidy, Hill, and Nevins describe Weyerhaeuser's monopolistic North Wisconsin timber interests and Sparks' attempts to restrain them (pp. 90ff, 131 and 141 note 25, citing Lillard's The Great Forest, p. 203).
Sparks is famous for being "impetuous," for having an "excitable disposition," and for his "crusading fervor."77 Sparks' blunt style can be found in the Congressional Record,78 and in his annual reports, which are full of stories about the "bold, defiant, and persistent depredators on the public domain."79 His sympathies were clear: "The rights of the corporations have been upheld The defaults of the companies have been voluntary. The rights of the public are now to be considered &endash; the right of the people to repossess themselves of their own. The case is not one calling for sympathy to the corporations; it is one calling for justice to the people of the country."80
One historian has observed, "During his three years in office Commissioner Sparks established a record practically unique in Land Office history. He attempted with considerable vigor to improve the methods, practices, and conditions of the Office... At times he blundered, but there is no question of his honesty... He worked with hope that he could secure Congressional assistance, but Congress only confronted him with additional handicaps."81
One wonders, given the legal and political atmosphere during the wholesale disposal of the public lands, and given the state of the General Land Office, if an effective reformer might not have blundered. Sparks' honesty and willingness to act boldly were what the GLO most needed. Yet more than a century later, Sparks is still viewed from some quarters with condescension and ill feeling.82
During Sparks' short tenure, Congress revested more than 28
million acres of railroad land grants, most of it from the Texas
Pacific and Atlantic & Pacific Railroads in New Mexico, Arizona
and California. In August and December 1887, Interior Secretary Lamar
had revoked
21 million acres in railroad land withdrawals and restored the lands
to public entry.83 During President Cleveland's
administration, more than 81 million acres were (at least
temporarily) restored to the public domain, land that had been
seized, as Sparks put it, by "illegal usurpation, improvident grants,
and fraudulent claims and entries."84
75 Rae, 1936, pp. 313ff, citing GLO Annual Report, 1888, p . 63. See also the coverage in the New York Tribune, Nov. 12, 1887, and the New York Times, Nov. 13 and 16, 1887, which, according to Dunham, 1937, stated that Interior Secretary Lamar, who was being appointed to the Supreme Court, removed Sparks "at the instigation of the incoming Secretary [of the Interior], William F. Vilas of Wisconsin, who disliked Sparks," perhaps because the Chicago, St. Paul land grant involved land in Wisconsin.
77 Rae, 1938.
78 Cong. Record, 46th Cong., 3rd Sess. p. 211, Dec. 20-21, 1880.
79 GLO Annual Report, 1886, p. 102.
80 GLO Annual Report, 1885, p. 50.
81 Dunham, 1937.
82 In 1996, more than a century after Sparks' departure, an officer of the U.S. Bureau of Land Management (the GLO's successor) told this author that "Sparks was a jerk." Sparks clearly made an impression on the public landsand on the agencies which administer them.
83 Lamar's decision is at 6 LD 77-93; discussion can be found in Yonce, 1969, pp. 216-217.
84 Sparks quote from Hidy, Hill, and Nevins, pp. 130-132. For descriptions see Ellis, 1946, Forfeiture, p. 42; and Rae, 1936, p. 320; Greever, 1951, p. 84; Robbins, pp. 255-267; and Nevins, p. 361.
85 Dunham, in Carstenson, 1963, pp. 197-198.
Interior Secretary William Vilas approved the speed-up in the work of the GLO, once issuing 3,633 patents in one week. His successor, John Noble, an attorney serving railroad, mining, and other large corporations in the Southwest, went even farther in speeding the patenting process, especially for timber cases, proving himself a true friend of the corporations' dummy entrymen. GLO Commissioner Lewis Groff attacked Sparks' reforms and did his best to downplay the fraud. 87
By the height of the movement to revest railroad land grants, Congressmen were announcing that
But Congress steadfastly refused to improve the GLO, and the courts refused to enforce the laws. Open fraud by prominent figures, ignored by Congress and upheld by the courts, was accompanied by continued bribery and violence against government officials and witnesses.89 The Great Barbecue continued until there was little left. What was left, the Forest Reserves, had to be set aside by administrative order. The GLO was absorbed into the U.S. Bureau of Land Management in 1946, which continues to pass public land and timber to corporations.
Congressional Committees and the Regulation of Railroads
Several Congressional committees investigated the construction of railroads and the implementation of the land grant policy. The Credit Mobilier scandal of the mid-1870s has already been mentioned. In another investigation in 1887 and 1888, the U.S. Pacific Railway Commission investigated the Central Pacific and Southern Pacific Railroads, finding corruption, unpaid debts, missing funds, and missing receipts and other records.90
Other investigations, concerned with the ongoing operation of the
railroads, led to the creation of the first regulatory agency: the
Interstate Commerce Commission. In 1885 and 1886, the Senate's
"Cullom" Committee investigated various railroad abuses, including
excessive and discriminatory rates, secret rebates, and manipulation
of railroad company stock. The committee's work led to the creation
in 1887 of the Interstate Commerce Commission (ICC) for the
regulation of railroad operations. However, the ICC was stacked with
railroad men, and with their usual creativity and ruthlessness, the
railroads managed to use the ICC to their advantage. In an 1892
letter to his friend Charles E. Perkins, president of the Chicago,
Burlington & Quincy Railroad, U.S. Attorney General Richard Olney
wrote:
Period 3: 1887-1894: The Push for a General Forfeiture Act
The organized push for general forfeiture legislation was softened by land grant defenders in the Senate, who succeeded in limiting the forfeitures to lands adjoining uncompleted portions of the railroads.
86 GLO Annual Report, 1888, pp. 4 and 64.
87 Dunham, in Carstenson, 1963, pp. 189-190.
88 Cong. Record, 17: 6245, June 28, 1886.
89 Dunham, in Carstenson, 1963, pp. 189ff, citing Yard, 1928. An example of Supreme Court collusion is noted in Dunham's description of the infamous Maxwell case (1963, at p. 194).
90 U.S. Pacific Railway Commission, 1887-1888. See also newspaper columns by Ambrose Bierce (such as those in Hearst's San Francisco Examiner and Cosmopolitan) and others.
91 Quoted in Fellmeth, 1970, pp. xiv-xv. For a history and analysis of railroad regulation, see Kolko, 1965.
92 43 U.S.C. 894-99 (Supp. IV, 1974).
From 1888, the real focus of Congress was on passage of a general forfeiture act which would deal with the almost 100 million acres of grant lands alongside railroads which had not been built on time. Various versions of general forfeiture legislation were pushed and compromised by land reformers, rival railroads, their stock and bondholders, and by their lobbyists and representatives in Congress.
A triangle of interests sought various degrees of forfeiture of unearned land grants. Three members of the House Committee on Public Lands agreed with the Senate's stance that 5,600,000 acres of lands adjoining uncompleted railroads should be forfeited. The majority on the Committee sought forfeiture of 54,000,000 acres of lands adjoining any portions of railroads not completed within their time limits. Two members sought the forfeiture of all 78,500,000 acres of the grant lands of railroads which had not been completed on time.93 Having sought revestment of grant lands for 20 years, U.S. Representative William Holman now argued against radical proposals which would doom the legislation, warning that endless litigation would result. The middle ground was approved by the House in a vote of 179 to 8, but it was rejected by the Senate.
Holman needn't have feared a radical law that couldn't be enforced. The General Forfeiture Act which did pass in 1890 was the conservative Senate's version of less than six million acres, which Holman charged was sponsored by the Northern Pacific Railroad itself in order to avoid a larger forfeiture. In fact, the Northern Pacific, having acquired the existing Oregon Railroad line along the Columbia River, did not intend to build another, and had given up any claims to the adjoining land.94
The General Forfeiture Act reclaimed only 5.6 million acres from eleven railroads, including the Northern Pacific (2,000,000 acres), the Southern Pacific (1,075,200 acres), the Gulf & Ship Island (652,800 acres), and the Mobile and Girard (536,064 acres).95
The fight in Congress was not yet over. In 1892, with the Populist Party calling for the return of all land "held by railroads and corporations in excess of their actual needs, and all lands now owned by aliens," the House passed a bill which called for the recovery of all lands not earned within the time limits. The bills would have revested more than 50 million acres, but the Senate failed to act.96
The House passed a similar bill in 1894, even protecting innocent
land purchasers by including an exemption for purchasers of less than
320 acres. The Senate again opposed the bill, with forfeiture
opponent Dolph warning that "vast interests, large
farms, vast tracts of lands, the interests of the purchasers of the
railroad companies... would be destroyed" by further
forfeitures.97 Of course, that was the point of
forfeitureto dismantle unintended empires. But Dolph represented
powerful interests, and prevailed. Forfeiture historian Ellis marks
1894 as the end of the forfeiture movement, observing that the later
forfeiture cases of the Oregon & California and Northern Pacific
Railroad grew out of special circumstances, and were different from
the 1867-1890 forfeitures, which were based mainly upon the
construction and time limit failures of the railroads.
Period 4: 1908-1917: Oregon & California Revestment
The General Forfeiture Act of 1890 had marked the climax of forfeiture as a strategy to deal with the failures of the land grant policy. Later forfeitures, while large, concerned but two railroads whose failures were especially glaring: the Oregon & California Railroad (by then a subsidiary of the Southern Pacific) and the Northern Pacific Railroad.
The Oregon & California forfeiture was preceded by the Oregon land fraud trials of 1903 to 1910. More than a thousand people were indicted, and more than 100 were convicted for defrauding the U.S. and Oregon state governments of land by forgery, perjury, falsification of records, bribery and intimidation of witnesses and officers of the courts, and obstructing free passages over public lands. Those indicted included the U.S. District Attorney, a General Land Office Commissioner and some of his agents, U.S. government surveyors, both U.S. Senators and a U.S. Representative from Oregon (including U.S. Senator Mitchell, who had been one of the staunch opponents of land grant forfeiture). Also indicted were Oregon State Senators, Assistant Attorneys for Oregon, city and county officials, and bankers, attorneys, lumber dealers, hotel owners, real estate agents, and stockbrokers.98 Wile convictions were relatively few, they were scandalously noteworthy, and resulted in the break-up of several land fraud rings, and in the repeal of the easily-abused lieu-land provisions of the Forest Reservation Act.99
The Oregon land fraud trials set the stage for a much larger case: that of the Oregon & California Railroad. By 1908, the O&C, out of its grant of 3.7 million acres, had sold only 813,000 acres, and only 127,000 acres of that had been sold in parcels no greater than 160 acres, to actual settlers only, for no more than $2.50 per acre. The O&C had sold the other 700,000 acres, much of it to timber corporations, in violation of the law, in parcels of thousands or tens of thousands of acres, at prices up to $10 per acre.100 And
94 24 Stat. 496. See Schwinden, p. 79; and Ellis, 1946, Forfeiture, p. 51.
95 Ellis, 1946, Forfeiture.
96 Quote from Porter, 1924, pp. 102-126; the House bill is discussed in the Cong. Record, 52 Cong., 1 Sess., 5125. See also Ellis, 1946, Forfeiture, pp. 52-55; Rae, 1938, p. 228; and Schwinden, 1950, p. 84, who lists several of the many forfeiture bills and resolutions which did not pass.
97 Ellis, 1946, Forfeiture, p. 55.
98 Jones, 1973, pp. 19ff.
99 Messing, 1966, pp. 62-63.
100 2238 U.S. 408, cited by Greene, 1976, p. 719.
in 1903, the O&C (by then a subsidiary of Harriman's Southern Pacific) announced that it would sell no more land at all. Investigators sent by President Roosevelt ended up on railroad and timber payrolls. Roosevelt eventually turned to Gifford Pinchot, who sent U.S. attorney Francis Heney, who successfully prosecuted some of the principals.101
After a series of Congressional acts and court decisions between 1908 and 1918, the Oregon & California Railroad forfeited 2,900,000 acres.102 The revested acreage was transferred to the GLO's successor agency, the U.S. Bureau of Land Management (BLM), which sold most of the timber to corporations over the next fifty years.
The O&C revestment set several important precedents. One was that railroads were not entitled to be rewarded for their speculation: with the backing of the U.S. Supreme Court, the railroad was paid only the $2.50 per acre it was supposed to have received.103 Another part of the revestiture proved quite agreeable to the purchasers of the railroad's lands. In 1912, Congress passed the Forgiveness (or Innocent Purchaser's) Act, which allowed purchasers of O&C parcels of more than 1,000 acres to keep the lands if they paid the U.S. government the $2.50 per acre originally required. Smaller purchasers weren't required to pay at all.104
Period 5: 1924-1940: The Battle for the Northern Pacific
The Northern Pacific Railroad received the largest of all land grants. Running across the northern tier from the Great Lakes to Puget Sound, the NP eventually claimed almost 40 million acres. In the size of its land grant, but also in its violations, controversies, investigations, and lawsuits, the Northern Pacific had no peers.
In 1886, General Land Office Commissioner Sparks restored to the public domain 1.5 million acres of Northern Pacific grant land grant in western Washington, declaring that the 1870 amendments to the original 1864 NP legislation did not clearly and unequivocally grant additional land. 105 Although House and Senate reports in 1884 recommended forfeiture of the NP's grant along the Columbia River,106 and there was a proposal in Congress to forfeit the Northern Pacific Railroad's Cascade line,107 Sparks' order was reversed by Interior Secretary Lamar in 1887.108 In 1888, a H.R. 9151, which would have forfeited three-quarters of
the NP land grant, was passed without debate, but the Senate refused to act upon it.109 The Western Washington land remained under the control of the NP, and soon became the basis for Weyerhaeuser's vast timber holdings in the Northwest.110
Instead, the 1890 General Forfeiture Act reclaimed only the two million acres of unearned NP land along the Columbia River, leaving most of the grant lands in control of the railroad. In the next two decades, the NP sold millions of acres to timber and mining corporations, including Weyerhaeuser, Boise Cascade, Potlatch, and Amalgamated Copper (later named Anaconda Copper).
In 1905, the Northern Pacific had filed a claim for 5,600 acres
within the Gallatin National Forest. In 1915, the GLO, having
realized its error in issuing the patents, filed suit against the NP,
but the U.S. Supreme Court ruled in 1921 that the government could
not deny land claims that fell within forest reserves.111
101 See Jones, 1973; and Messing, 1969, for summaries of the
frauds and the trials. For a contemporary account by a participant in
one of the fraud rings, see Puter, 1908. It was Puter who had bribed
U.S. Senator Mitchell.
102 The 1915 decision in Oregon & California Railway Co. v. U.S. (238 U.S. 393) declared that the land should be revested; the Chamberlain-Ferris Act, 39 Stat. 218 (1916) legislated the revestment.
103 Oregon & California Railroad Co. v. U.S., 243 U.S. 549 (1918).
104 37 Stat. 320 (1912). Jones (1973, p. 28-31) claimed that the government thereby received a total of $1 million for timberlands worth more than $447 million.
105 Rae, 1938, p. 219, citing McRae vs. Northern Pacific, Jan. 12, 1886, Copp's Land Owner, XII, 1886, p. 267.
106 House Reports, 48 Cong., 1 Sess., No. 1256; Senate Reports, 48 Cong., 1 Sess., No. 804.
107 Schwinden, p. 78ff.
108 Sept. 30, 1887, Decisions of the Interior and the General Land Office in Cases Relating to the Public Lands, IV, 1887-1888, p. 400. For a Seattle newspaper's defense of Sparks' action, see Seattle Weekly P-I, Feb. 4, 1886. See also Rae, 1936, p. 301ff.
109 Schwinden, p. 84.
110 Weyerhaeuser bought almost a million acres of NP land in 1900; see Jensen et al 1995.
111 U.S. v. NP, 256 U.S. 51, 41 S. Ct. 439 (1921), the Forest Reserve Case.
In 1929, Congress acted upon the Joint Committee's recommendations by revoking NP's claims to another 2,900,000 acres lying within National Forests in Montana, Washington, Idaho, and Oregon, and directing the U.S. Attorney General to file suit against the railroad in order to have a complete judicial accounting and determination of any and all issues arising out of violations of the Northern Pacific land grant.112
Twenty-two charges were brought by the U.S. against the railroad. A complex ten-year case followed, with rulings by special masters, federal district courts, and the U.S. Supreme Court.113 The Supreme Court left several major charges undecided, and the entire case was ended with a settlement between the railroad and the Attorney General. Northern Pacific agreed to pay the U.S. $300,000 and lost its claims to 2.9 million acres, but retained 39 million acres of land.
1941: The Railroads Release Further Claims
Between 1867 and 1940, more than forty million acres of railroad grant land had been forfeited. On the eve of World War II, the railroads and the federal government had another concern: the requirement that the land grant railroads haul military freight at reduced rates. The U.S. Board of Investigation and Research, created by the Transportation Act of 1940, concluded that the ending of land grant rail rate concessions should be a "two-way street," with the railroads returning their remaining lands to the government.114 So in 1941, with their eye on wartime profits, the land grant railroads released further claims on eight million acres, in exchange for being released from reduced rates for government freight. More than half of the acreage released was by the Northern Pacific, which surrendered 4,500,000 acres of additional claims.115
The Board's investigation provided the following list: 116
112 46 Stat. 41
113 United States v. Northern Pacific, 311 U.S. 317 (1940).
114 Transportation Act of 1940, 54 Stat. 898 at 954.
115 Ellis, 1946, Forfeiture, p. 44.
116 U.S. Board of Investigation and Research, 1945.
Was the public interest served by subsidizing the transcontinental railroads with public land grants? Historians have argued convincingly that not only would the land grant railroads have been built without subsidies,121 but that the land grant railroads actually delayed settlement of the West.122 In the nineteenth century, the opening and settling of the West was widely assumed to be a public good bordering on absolute necessity. But it clearly benefited some more than others, and the wisdom of the land grant policy was ferociously debated even at the time.123
Another issue is the size of the land grants. Author Lloyd Mercer, who spent years analyzing the land grant subsidies, did his best to show that they were a profitable deal for the public, but he didn't factor in the billions of dollars worth of real estate, timber, coal, oil, gold, and other resources in his calculations. He also stopped his calculations at the year 1900, using turn-of-the-century land values and rates of return. Even so, he concluded that the Northern Pacific grant was particularly excessive.124
The public (i.e., the settlers) should hardly have been "secondary beneficiaries," as Leshy describes them. Yet the public has participated in its own defrauding. It is time for the public, through its representatives in Congress, to right the wrongs of a century.
The Northern Pacific "Empire Builder" James Hill dismissed the
controversies, claiming that "When we are all dead and gone the sun
will still shine, the rain will fall, and this railroad will run as
usual."125
Law professor John Leshy has summarized the problems in the land
grant policy, and of the attempts of Congress and the courts to
address those problems.117 His conclusions are quoted at
length because he is currently the Solicitor of the U.S. Department
of Interior.
117 Leshy, 1984, pp. 242-243.
118 They were ineffective more because they were unenforced rather than unenforceable, ultimately because Congress chose to use ambiguous language and to include contradictory clauses, and the courts chose not to interpret it.
119 At least they tried to wash their hands; the checkerboard pattern remains.
120 Leshy, 1984, pp. 242-243.
121 See, for example, Morgan, 1946. Even land grant defender John Rae concludes that the subsidies merely hastened railroads which would have been built anyway, citing the U.S. Federal Coordinator of Transportation's estimate in Land Grants, Contributions, Loans, and Other Aids to Railroads that the roads would have been built within ten to fifteen years in any case.
122 Shannon, 1946.
123 The era is rife with Congressional debates over "perpetual monopolies", newspaper stories and editorials, and pamphlets such as the Seattle Post-Intelligencer's "Black Cloud."
124 Mercer, 1982.
125 Quoted in the Encyclopedia of American Business and History: Railroads in the Nineteenth Century, p. 175.
Perhaps a more realistic estimate has come from public lands
scholars George Coggins and Charles Wilkinson:
Nor will it, as long as the lands are controlled by corporations to the detriment of local communities, the public, and the land itself. As historian Fred Shannon wrote in 1946,
The railroads and their defenders continue to claim that the land grant era ended in 1941. For example, railroad lobbyist Frank Wilner has argued that "both Congress and the federal courts have ruled that the books have been closed on the matter of past railroad land grants."129 Many legal scholars disagree, and the U.S. Supreme Court itself, in the O&C revestment case, declared that "[the land grant laws] are covenants, and enforceable The grants must be taken as they were given. Assent to them was required and made The acts are laws as well as grants and must be given the exactness of laws. This comment applies to and answers all the other contentions of the railroad company based on waiver, acquiescence and estoppel and even to the defenses of laches and the statute of limitations."130
Regardless of the pronouncements of railroad men, lobbyists, and judges, the land grant legacy clearly lives on, as can be seen by examining today's socioeconomic and environmental controversies in newspaper headlines,131 Congressional hearings, citizen's petitions for return of the grant lands, land exchanges involving land grant checkerboards, and other efforts to address the continuing problems deriving from the land grant legacy.
The days of robber barons, open fraud, and railroad wars are not over. The heirs to the land grant empires continue their control of the land, and their political influence. Timber and mining corporations which acquired railroad grant lands use their wealth
126 One can argue that the list of effects which follows are not unalloyed benefits.
127 Coggins and Wilkinson, 1987, pp. 106-108.
128 Shannon, 1946.
129 Wilner, 1981. Another example, from the American Bar Association, is Root, 1987.
130 Oregon & California Railroad Company v. U.S., 238 U.S. 393 at 423-427 (1915).
131 For example, see Long, 1993, and Nelson et al, 1998. Dozens of modern and historical news stories about the land grants have been collected in Transitions, the journal of The Lands Council, 517 S. Division St., Spokane WA 99202, www.landscouncil.org.
to defeat state referendums for forest protection, to forward their own legislative proposals which give them access to additional public lands132 and exempt them from environmental laws,133 to squeeze independent companies out of business, and to price-gouge consumers,134 and to export forests and jobs.135
Citizen Pressure, Agency Hearings and Investigations
As in the nineteenth century, the public pushes regulators, Congress, and the courts to understand and resist the political power of the land grant corporations.
In 1972, the National Coalition for Land Reform (NCLR) filed a
"Petition for Return of Railroad Lands" as an administrative
complaint to the Secretary of the Interior. The petition asked the
Secretary to investigate the status of the land grant-based
corporations and their noncompliance with the law, an investigation
which the petitioners were convinced should result in forfeiture or
sale of the remaining grant lands, and reimbursement to the public
treasury of profits derived from illegal exploitation of the
grant
lands.136 The Secretary's rejection of the petition was
filed on August 31, 1972, "on behalf of the Southern Pacific
Transportation and Southern Pacific Land Company."
A few years later, the non-profit Center for Balanced Transportation (CBT) urged Congress to conduct oversight hearings into the Interior Department's handling of the NCLR's land grant petition. The CBT, whose work encompassed national and state transportation and energy issues, had conducted historical and legal analyses of the Northern Pacific land grant, concluding that the policy had failed, but that Congress could still address the problems.137
In the early 1980s, the National Council of Farmer Cooperatives, backed by the National Grange, the National Farmers Organization, the American Farm Bureau, and the National Wheat Growers Association, called for congressional investigation into the "obligation of the land grant railroads to use their land grant income to sustain and strengthen rail operations and the extent to which the carriers have breached their contracts with the
133 When Northern Pacific land grant heir Weyerhaeuser was threatened with cutting restrictions due to spotted owl protections, chairman George Weyerhaeuser lobbied Yale classmate George Bush, to apparent good effect. Plum Creek Timber's Habitat Conservation Plans give it 50-year exemptions from the Endangered Species Act.
134 Weyerhaeuser and its associated companies, Boise Cascade and Potlatch, have been indicted and convicted of numerous counts of price fixing and other antitrust violations, from the early 1900s up through the 1990s.
135 Public Information Network, Railroads & Clearcuts News, No. 3, September 1997.
136 Greene, et al, 1975.
137 See CBT director Rick Applegate's testimony (Applegate, 1979), and Goetz, 1979.
Unhitching the Grants, Exploiting the Land
In the 1970s and 1980s, as a result of a complex web of events, including the depletion of public lands resources, declining railroad profits, and railroad deregulation, many of the land grant railroads "spun-off" their land grant resources into new, independent corporations. The railroad mergers and restructuring inspired protest from rival transportation systems, railroad employees, citizens, and a new wave of hearings and studies by state139 and federal governments.
The U.S. Interstate Commerce Commission (ICC) conducted several
studies on railroad mergers and holding companies.140 Its
1977 study on "Railroad Conglomerates and Other Corporate Structures"
showed that land, natural resources, and other
valuable assets (assets acquired over the years by government grant)
had been diverted from the railroads' transportation purposes and had
diminished railroad revenues. "The railroad as an instrument of
public service has been deprived of wealth accumulated over many
years, including resources such as land grants provided at public
expense." The ICC concluded that "the interests of conglomerate
managements and their stockholders often diverge from the public
interest in a sound transportation system," and that "the
continuation of asset separation poses a potential threat to the
future health of the Nation's rail system."141
In 1982, U.S. Representative Byron Dorgan (D-SD) initiated a Congressional investigation of railroads by the House Committee on Energy and Commerce. Dorgan claimed that the Interstate Commerce Commission "has adopted such a narrow view of its authority regarding rail holding companies and land grants... that
138 Letter from NCFC to Chairman Packwood, U.S. Senate
Committee on Commerce, Science and Transportation, Nov. 17, 1981,
cited by Creedy, 1983, p.159.
139 For example, see Burlington Northern: Its Continuing Responsibilities as a Land Grant Railroad: Hearing before North Dakota State Tax Commissioner Kent Conrad, Bismark, ND, Oct. 1, 1981. See Creedy, 1983.
140 U.S. ICC, 1969, 1970, and 1977.
141 U.S. ICC, pp. 30, 71-72.
Joint Congressional Committee hearings requested by Dorgan and Representative Pat Williams (D-MT) were followed by a bill introduced by Williams that would require all land grant railroads (or their holding companies) to put a third of their pre-tax profits from resource extraction into railroad maintenance. Williams declared that "Congress must decide whether the public still has a right to demand service from the railroads as a result of the enormous grants of land they received in the 1880s."143
In 1980, U.S. Rep. John Dingell (D-MI), chairman of the House Energy and Commerce Committee, requested that the Interstate Commerce Commission condition approval of the proposed merger of the Union Pacific, Missouri Pacific, and Western Pacific Railroads upon a study of the value of their land grants and mineral rights. Dingell wrote that "it is unacceptable to have government aid diverted from its main objective of benefiting the ultimate public which the railroads serve."144 The next year, U.S. Representative Sieberling (D-OH), also concerned about the transfer of land grant assets to non-rail corporations, requested that the ICC continue its investigations of the effects of railroad holding companies which then spun off land grant assets to separate corporations.145
Calls for the investigation of railroad holding companies and land
grant spin-offs also came from railroad employees and rival
transportation systems. For example, the Water Transport Association
claimed that the revenues and profits from land grant resources
should be included when determining how much railroads should be
allowed to charge for service.146 Additional challengers
to
Burlington Northern Railroad's move to create a holding company for
land grant assets included the Western Coal Traffic League, the State
of Minnesota, BN employees, and a citizens group.147
In 1982 hearings before the Senate Judiciary Committee, the Railway Labor Executives Association expressed concern over the reduction of railroad plant and rail labor jobs due to the stripping of assets. The Western Coal Traffic League (utilities and
142 Dorgan letter, May 12, 1982, quoted in Creedy, 1983, p.161.
143 Cited in Creedy, 1983.
144 Traffic World, 1981.
145 Sieberling's letter is cited in Traffic World, 1981; see also the report by the U.S. Interstate Commerce Commission, 1977.
146 Traffic World, 1981; Creedy, 1983.
147 Traffic World, 1981.
The conclusions of these hearings were backed by Congressional Research Service studies which reiterated the continuing obligations of the railroads, and the duty of Congress to determine just what those obligations were.150
Land Buy-Outs: Buying Back Public Land
Though the grant lands were supposed to be sold to settlers, generally at $2.50 per acre, much of the land was held by the railroads or sold in large parcels to other corporations. Under the rationale that the public needs green space, some of the corporations are now selling the grant lands back to the publicat hundreds or thousands of dollars per acre.
Timber corporations, real estate brokers, and others are misusing the land exchange process in order to speculate for quick profits. Improper procedures, conflicts of interest, and bribery in connection with various land exchanges have led to four audits of the BLM and several ongoing investigations of the U.S. Forest Service.
An investigative series on the abuses and problems with the land exchanges was published in the Seattle Times in 1998. The authors recommended several reforms, including (1) that exchange lands should be traded lands to the highest bidder, rather than to the corporation which suggests a deal; (2) the land appraisals should be made public; and (3) the public should be given a seat at the negotiating table.151 Many of the grassroots citizens groups which have arisen to monitor corporate-government land exchanges, including the Seattle-based Western Land Exchange Project, agree with these recommendations, and are working to expose land exchange abuses, to ensure that reforms will take place.
The land exchanges give a century-old court decision new relevancy: "It seems but an ill return for the generosity of the Government in granting these [rail]roads half its lands to claim that it thereby incidentally granted them the benefit of the whole."152
Conclusion
The names and faces of land grant reformers have changed, and the current issues may seem unique. But the goals and visions of the Farmers Alliances, the Populists, the conservationists, and all the others who have fought for democracy are alive. Their work
Every year, there are dozens of land exchanges around the country.
Originally used as a way to deal with small private inholdings within
public lands, in recent years the exchanges have become much larger,
often encompassing tens of thousands of acres. Many of the land
exchanges now being arranged involve the land grant checkerboards.
Exchanges are a politically palatable way to consolidate the
fragmented public-private land ownership patterns created by the
railroad land grants.But in the process, public lands are being
exchanged for land that had already been donated to the railroadsin
effect, a second public land grant.
to mitigate and reform the land grant policy continues, as it has for
more than a century. What is missing from the scene today is an
informed, aroused movement to revest the land grants themselves.
An opinion poll during World War II showed that only half of the population had ever heard of the railroad land grants, and most of them thought the railroads had paid for the land.153 Since then, another half-century has passed, and the land grants have an even smaller place in our social memory. Without an awareness of the past, and an understanding of how it affects the present, we will continue to suffer the continuing impacts of the land grant legacy.
149 All quotes from Creedy, 1983, citing U.S. Senate Judiciary Committee, Hearings on Rail Mergers and the Formation of the BN Holding Company, March 26, 1982.
150 Baldwin, 1981; Wiemer, 1983; and Backiel and Baldwin, 1986.
151 Nelson et al, 1998.
152 Camfield v. United States, 167 U.S. 518 (1897).
153 Morgan, 1946, citing Railway Age, Dec. 9, 1944, pp. 888-889.
As William Faulkner once wrote, "history isn't dead; it's not even past." It is time to revisit the land grant era, an era which never ended. It's time to revest the land back to the public. The era of selling public lands to settlers is long over, but corporate control of land and resources has never been stronger than today. And the public lands have never been more in need of protection.
154 Greene, 1976, p.p. 750-751.
U.S. Congress, House. 1886. Land Grant Forfeiture Resolution by Representative Herman. 49th Cong., 1st sess., H. Misc. Doc. no. 169. Mar. 22, 1886.
