The Great American Land Bubble

THE

GREAT AMERICAN LAND BUBBLE

o

ROBERT MORRIS-PATRIOT

AND FINANCIER

AMERICA'S FOREMOST LAND BOOMER

The GREAT AMERICAN LAND BUBBLE The Amazing Story of Land-Grabbing, Speculations, and Bootrls from Colonial Days to the Present Time by

A. M. SAKOLSKI ASSISTAN~ PROJPESSOR OF FINANCE COLLEOS THE (.1TY OP kBW YORK

or

HARPER tI BROTHERS PUBLISHERS NEW YORK AND LONDON

1932

Reprinted with the permission of Harper & Row JOHNSON REPRINT CORPORATION 111 Fifth Avenue, New York, N.Y. 10003

JOHNSON REPRINT COMPANY LTD Berkeley Square House, London, W. 1

THE GREAT AMERICAN LAND BUBBLE

Copyri,ht, 1932, by Harper. Brothers Printed in the U. S. A. FIRST EDITION

I-G

History of

~/merican

Economy: Studies and Materials for Study

A series of reprints of the important studies and source books relating to the growth of the Arne r,ican economic system.

General Editor: William N. Parker

First reprinting,

I

966, Johnson Reprint Corporation

Printed in the United States of America

PREFACE

speculation in the United States has been a national business. Yet 110 history of it has hitherto been written-and small wonder! Pecuniary speculation has ever been looked upon as a dubious business. It therefore has been conducted largely in secret and without enduring records. Arduous research is required by those who delve into its intricate dealings. From time to time, however, an historian or research student has given to the public intimate or fragmentary accounts of isolated episodes relating directly or indirectly to American land speculation. To these authors I wish to convey my acknowledgment of valuable assistance. In the present volume no attempt has been made to give a detailed account of all important speculative land transactions. Moreover the story is restricted to speculation and is not directly concerned with the loss or growth of great fortunes from real estate investment. In the preparation of the manuscript, credit is due to Miss Alice Strass. To Professor H. S. Commager of New York University lowe a debt of gratitude for valuable suggestions, and to Professor John Hastings Qf the College of the City of New York for the preparation of the maps. Mr. Myron L. Hoch of the Department of Economics at the City College gave valuable assistance in the preparation of the work for publication. LAND

A. M. SA KOLSKI May, 1932

Contents Pace

Chapter I. Chapter II. Chapter III. Chapter IV. Chapter V. Chapter VI. Chapter VII. Chapter VIII: Chapter IX. Chapter X. Chapter XI. Chapter XII. Chapter XIII. Chapter XIV. Chapter XV. Chapter XVI.

Pre-Revolutionary Precedents The Post-Revolutionary Wild-land Mania Parceling Out the Empire State at Wholesale Parceling Out the Empire State at Retail The Ohio Land Lure The Georgia "Yazoo" Land Frauds Washington, America's First Boom Town Filling Up the "Old Northwest" Louisiana Spanish Grants and their "Antedaters" The Texas Fever Generating the Panic of 1837 California's Golden Land Gambles Railroad Land Jobbery Jay Cooke's "Banana Belt" "Main Streets" and "Broadways" Florida-the Latest Phase Index

1 29 54 73 99 124 147 169 192 213 232 255 275 294 312 321 353

111 us tra tions Robert Morris, Patriot and Financier-AmerFrontispiece ica's Foremost Land Boomer The Black Line Marks the "Indian Boundary" Beyond Which the Colonists Were Ordered PaAe 6 Not to Go facinA paAe 18 Patrick Henry Benjamin Franklin " " 19 Taken from Jedidiah Morse's The American GeoAraphy, Published in London, 1794. Circles Show Claims of the Ohio, Illinois, and Wabash Companies. Indiana Is Placed Just PaAe 19 West of Maryland Sir William Johnson, British Indian Agent in FacinA paAe 34 the Northern Colonies James Duane " " 34 Timothy Pickering " " 35 James Greenleaf " " 35 The Prospectus of the North American Land Company Issued in London. Morris' Effort PaAe 50 to Interest British Speculators Gouverneur Morris, Statesman, Diplomat, and Land Agent Facins pase SO William Constable, Principal Proprietor of MaSO comb's Purchase " " 51 Jeremiah Wadsworth " The Map of Macomb's Purchase Which James Constable Took to Europe. The Adjoining Tracts Are Marked as "Thick Settled Sec66 tions" When They Were Still Wilderness " " Le Roy de Chaumont, Proprietor of Northern New York Lands " 67 " PaAe 70 New York State Parceled Out at Wholesale Advertisement of the Pulteney Estate in the 78 Hartford Courant, January 14, 1807 " An Early Map of Holland Purchase, Published in France in 1803. in Jean Phillippe Louis

ILLUSTRATIONS Bridel's Le pour et Ie contre, ou avis it ceus qui se proposent de passer dans les

Etats-Unis d'Amerique Broadside of Holland Land Company, April 24, 1821, Announcing the Failure to Plan to Sell Out to the State, and Offering New Terms to Settlers Prospectus of the Compagnie de New York The Ohio Land Grants Madame de StaSI, Who Speculated in Northern New York Lands Bronze Tablet Commemorating the Grant to Ohio Company of Associates, on the Portal of the Sub-treasury Building, New York City William Duer J.oel Barlow John Cleves Symmes A Miami Land-Warrant Jonathan Dayton First Partition of the Yazoo Territory James Wilson, Associate Justice of the U. S. Supreme Court The First Plan of the City of Washington, Engraved in 1792 and Used in Selling the "Lots" The Second Partition of the Yazoo Lands as Shown by Jedidiah Morse in His American Gazeteer, published in 1797 One of the "Yazoo Frauds" Pamphlets An Early View of Washington Thomas Law, an Englishman Who Bought Real Estate in the Federal City An Illustration of Early Western Town Jobbing A Contemporary Portrait of Nicholas Longworth Embellished with His Favorite Fruit and Beverage The Banks of the Ohio. Mr. Longworth's Vineyards Morris Birkbeck John Jacob Astor

PaAe 80

" " "

85 88 100

FacinA page 102

" " " " " "

" " " " " "

103 110 110 111 114 115 PaAe 127

Facing paAe 130

"

"

131

PaAe 134 " 138 FacinA paAe 162

" "

"

163 178

"

"

179

"

"

"

179 PaAe 188 FacinA paAe 194

ILLUSTRATIONS

xi

Facin~ pa~e 195 Aaron Burr Location of the De Bastrop Claim, Based upon Pa~e 203 Map in the U. S. Land Office FacinA paAe 210 Moses Austin " "211 Stephen F. Austin in 1836 " "211 Stephen F. Austin in Hunting Costume The Principal Texas Grants Based on Map PubPaAe 220 lished in 1836 Daniel Webster, Whose Interest in Western FacinA paAe 242 Lands Was Both Private and Public Chicago in 1831 " "243 Map of Chicago, Dated 1836, Showing Location of the" Canal Lots" and Tracts Bought and Resold by Charles Butler, G. B. Hubbard, and Associates " 258 " The "Proposed" New Brighton, Staten Island, Development " 259 " William B. Ogden, First Mayor of Chicago and a Large Real Estate Proprietor " 262 " San Francisco in 1848 " 263 " Map of San Francisco about 1851 " 270 " John Augustus Sutter, on Whose Estate Gold Was Discovered " 271 " John C. Fremont " 278 " Robert Rantoul, Jr., Who Obtained the Land Grant for the Illinois Central Railroad " 279 " George Francis Train " " 286 Laying the Track of the Pacific Railroad " 287 " Jay Cooke " 290 " Map of Location of the Northern Pacific Land Grant, "Banana Belt," Which Inspired J. Proctor Knott's Famous Speech " 291 " Duluth, the" Zenith City of the Unsalted Seas" in 1871 " 306 " The Circle Marks the Location of the "Bonanza Farms" PaAe 307 Harvesting on a Bonanza Farm Facins pase 307 The City of New Babylon on Paper Pase 316 The City of New Babylon in Fact " 317

xii

ILLUSTRATIONS

Martin Chuzzlewit Selects His Lot in the Thriving City of Eden Facins pase 322 The Thriving City of Eden in Fact " 322 " Making More Land in Florida to Meet the Demand of Speculators " 323 " The Davis Island Country Club Built on Land That a Year Previous Was Under Water " " 323 Skyscrapers Rising on the Miami Waterfront in November, 1925 " 338 " An Alluring and Artistic Full-page Advertisement of Boca Raton " " 339

THE GREAT AMERICAN LAND BUBBLE

( 1)

CHAPTER I

PRE-REVOLUTIONARY PRECEDENTS

from its inception, was a speculation. It was a speculation to Columbus. It was considered a speculation by the kings of Spain, France and England. They looked upon it as a source of riches in gold, silver and pelts. It was from the land that these precious goods were produced, and.the ownership of the land was as essential to them 3$ the political jurisdiction over it. Royal favorites were accordingly given vast territories, and land was distributed to individuals culd companies as royal rewards. The colonial charters granted in England to individuals and companies gave proprietorship of the soil, but the king reserved political jurisdiction and control, as well as the mineral rights. Thus, Penn and Calvert and Oglethorpe received merely grants of land. The governing and feudal rights which they assumed were revocable at the r~yal will, and as the colonies became more densely settled and advanced in political status, the king appointed governors to rule over them. When the proprietary right to the soil had ~been given, the possessors of these rights or their assigns continued to hold the land originally allotted to them. James, Duke of York, to whom his affectionate brother had presented the whole Dutch province of New Amsterdam, and more besides, began to sell or otherwise dispose of his vast domain. He granted to Lords Carteret and Berkeley most of the province of New Jersey. These sold out to two companies, -the "Proprietors of East Jersey" and the "Proprietors of West Jersey" respectively,-companies which continued in existence during the eighteenth century, though they lost their feudal rights

AMERICA,

THE GREAT AMERICAN LAND BUBBLE

2

as early as 1702. James also made other lavish grants. Some of these were revived in later years, caus~ng serious trepidation to property owners whose titles were threatened by new _claimants. Thus, the conveyance of unoccupied lands to private individuals or companies, which undertook the management, settlement and resale, was a common practice in colonial times. In fact, much of the early English settlement of America was conducted on" ~his plan. The London and Plymouth companies were ostensibly t~ading companies, but the motive of land speculation, though not openly expressed, was an important factor in the settlement of the colonies. As population began to fill up the accessible regions within colonial charter grants, the acquisition of large unsettled tracts for pecuniary gain came more and more into vogue. During the first hundred years of North American colonization, economic conditions gave little encouragement to pnvate land schemes. Land was too plentiful. A few such enterprises were undertaken, however. Thus, as early as 1661, the Colony of Massachusetts sold to a few individuals for £400 a large tract on the Kennebec River in Maine. This became known as the "Kennebec Purchase." The heirs held it for nearly a century without doing anything with it. In 1753, they incorporated as the "Proprietors of the Kennebec Purchase" and proceeded to dispose of their holdings. The corporation continued in existence until 1816. 1 "The Pejebscot Company" was another Maine land deal. None of these held out promise of profit to proprietors until about a quarter century before the Revolution. About this time, wealth had accumulated in the colonies. Free land, obtained under crown grants, or "head rights," had ceased. Cities and channels of trade were established and population gradually pushed forward to the Alleghany foothills. The vast unoccupied tracts beyond became a lure. Few dared to settle in the region. Actual ownership was held by the Indians, and claimed by the French. This was not a discouragement, however. Did not the territories occupied by the flourishing colonies once belong to the Indians? And was it not bought from them for mere trifles? Why not, then, establish similar colonies to the west, 1

M ame Historical Collections, Vol. II, pp. 268-294.

PRE-REVOLUTIONARY PRECEDENTS

3

and start anew in building up land values. To the descendants of the pioneer colonials, the backwoods, Indians, and hostile Frenchmen presented no serious obstacles. Proprietorship of large landed estates, mureover, was highly regarded by the. colonials. It was an emblem of nobility. It carried with it political. as well as pecuniary preferment. This was particularly characteristic of the South. There, during the colonial days the presence of large landed estates, engrossed in comparatively few hands, fostereOd a landed aristocracy. Land ownership, therefore, was desirable for social and political, as well as for pecuniary reasons. The Virginian was not much of a "gentleman" unless he lived in the midst of countless acres. If he was a non-resident owner, or a large "patentee" of the crown, he employed land agents on the spot to look after his estates or to sell and lease his holdings. Grants of land in the southern colonies were a source of continual political intrigues. In fact, land grabbing in the South began before the importance of either negroes or tobacco was recognized. As the areas east of the Alleghany Mountains were gradually engrossed, and as towns and plantations spread out to the Piedmont sections, covetous eyes were pointed toward the vast unsettled domain to the westward. The political sovereignty and administrative control of the territory were in doubt. Various colonies claimed a share of the westward area as part of their original ch.arter grants. The charter limits were not fixed, so that the conflicting claims overlapped. This brought about disputes regarding ownership and right to the control of the soil. Intercolonial jealousy and territorial greed led the rival claimants to take measures, secretly and openly, to assert their rights by actual occupation or by royal conveyances. The first definite move to obtain a large grant of western land was made in 1748, when a group of Virginians, styling themselves the "Ohio Company," obtained a crown grant of 500,000 acres west of the Alleghanies adjacent to Virginia. The next year another group of forty-six Virginia gentlemen styling themselves "The Loyal Company" received an additional 800,000 acres near by. Both grants were made by the Governor and Coun-

4

TH:E: GREAT AMERICAN LAND BUBBLE

cil of Virginia. The locations were not surveyed nor definitely marked out. That of the Ohio Company was to be located "south of the Ohio River," and the Loyal Company's grant was to be "in one or more surveys beginning on the bounds between Virginia and South Carolina and running westward to the North Seas." The companies were to locate their lands, and make return of surveys within four years' time. Both set about to secure their grants. Christopher Gist, one of the noted surveyors of Virginia, was sent in October, 1750, to "search out" and to discover the Ohio Company's lands. He went down the Ohio as far south as the present site of Louisville. During his journey he made strong overtures of friendship with the Indians. He was enthusiastic about the project. "Nothing," he said, "is wanting but cultivation to make it a most delightful country." In the meantime, the "Loyal Company" group was not idle; its proprietors sent Dr. Thomas Walker, of Albermarle, Va., to make a reconnaissance, and to discover a proper place of settlement. The two "companies" then became engaged in a controversy, and neither made a surveyor fixed the bounds of their grants. The apparent ease with which they obtained land donations led to other schemes, and aroused an epidemic of interest in distant western wild lands. Not only was the land ownership eagerly sought after, but the establishment of new colonies, with separate and distinct governments, was planned. Favoritism and collusion infested the Virginian colonial government, due in large part to the persistence of speculators in western land grants. Lobbyists were sent to London to obtain the crown's sanction to land-grabbing schemes and the question of the disposal of the vast western domain won from the French infested British politics. "One half of England is now land mad," wrote George Croghan, of Philadelphia, one of the land schemers, to Sir William Johnson, on March 30, 1766, "and everybody there has their eyes fixed on this oountry."2 George Washington and his half-brothers, Augustine and Lawrence Washington, were concerned in the Ohio Company. J The Sir William Johnson Papers, Vol. V, p. 129. See also, C. W. Alvord, The Mississippi Valley in British Politics, Oeveland, 1917.

PRE-REVOLUTIONARY PRECEDENTS

5

Thus, Washington, early in his political career, was brought into contact with land grabbing. From this time on, until the outbreak of the Revolution, his interest in western land~ was supreme. He was one of the most active land speculators of colonial times. He was, moreover, a surveyor by profession. As a "land ag~nt"