Land Development and Speculation

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Land Development and Speculation


Western Promises. As Americans turned their thoughts toward restoring a peacetime order after the end of the Revolution, many expressed optimism about their economic future. The most significant resource backing their hopes was land, which Americans had in abundance. Thomas Jefferson captured this feeling when he wrote in Notes on the State of Virginia (1787) that the immensity of land in the West would enrich those who farmed it as well as preserve a republic in vigour. Some of the most significant political and military events of the era were directed toward securing control over land, and they left the United States in 1815 as one of the largest countries in the world. In 1783 the Treaty of Paris ended the Revolution and gave the United States control over all the land north of Florida, south of the Great Lakes, and east of the Mississippi River. This huge area was almost doubled in 1803 with the purchase of the Louisiana Territory from France for $15 million. This moved the western boundary to the Rockies and assured control over the Mississippi River valley, the main transportation artery for the continental interior. Land was a crucial factor for the people interested in securing a stable government in the United States. Many saw it as the best way to finance the new government, which could sell the land it controlled. It was thus a resource for paying off the new countrys war debts, although it was necessary first for the federal government to assert its control over this area. There were competing claims. Although Britain had ceded its claims, the trans-Appalachian Indian tribes occupying the West had not, and the American government fought almost constantly to remove them from the course of white western settlement. Some of the government land was claimed by Revolutionary War veterans, who had been paid for their service with claims on land rather than cash. The rapid growth of emigration to the West after the end of the war threatened to undermine the governments efforts to profit from the orderly development of the area. George Washington recognized this, writing in 1784 to Richard Henry Lee, the president of the Congress, that the spirit for emigration is great, people have got impatient, and tho you cannot stop the road, it is yet in your power to mark the way; a little while and you will not be able to do either.

State Rivalries. Among the most complicated problems for land development were conflicting claims by many of the original states to western territory. Land claims were only one way the states competed with each other, especially before the Constitution gave the central government more authority over interstate matters. Before that time, the states not only taxed foreign trade but put up trade barriers against each other. They also refused to honor currencies issued in other states. Rival territorial claims were so important, however, that they threatened to destroy the union even before it started. Massachusetts, Connecticut, New York, Virginia, North Carolina, South Carolina, and Georgia all claimed land as far west as the Mississippi, based on the original royal charters establishing the colonies. States without such claims, particularly Maryland, refused to ratify the Articles of Confederation until the larger states gave up their claims. Virginias claims were the largest, and it was their cession to the United States in 1781 that allowed the Articles to be ratified. Congress only accepted the cession in 1784, however, as competing claims from various land companies that had invested in western property were settled. It was only then that a national domain was formed. The disposition of that land would be a problem for years to come.


The American author Washington Irving, best known for the story of Rip Van Winkle, wrote in 1836 an account of life in the Pacific Northwest before the War of 1812 at the request of John Jacob Astor, who controlled the fur trade there. It included this description of the fur trade to China:

The last voyage of that renowned but unfortunate discoverer, Captain Cook, had made known the vast quantities of the sea otter to be found along [the Pacific] coast, and the immense prices to be paid for its fur in China. It was as if a new gold coast had been discovered. Individuals from various countries dashed into this lucrative traffic, so that in the year 1792, there were twenty-one vessels under different flags, plying along the coast and trading with the natives. The greater part of them were American, and owned by Boston merchants. They generally remained on the coast, and about the adjacent seas for two years, carrying on as wandering and adventurous a commerce on the water as did the traders and trappers on land. Their trade extended along the whole coast from California to the high northern latitudes. They would run in near shore, anchor, and wait for the natives to come off in their canoes with peltries. The trade exhausted at one place, they would up anchor and off to another. In this way they would consume the summer, and when autumn came on, would run down to the Sandwich Islands and winter in some friendly and plentiful harbor. In the following year they would resume their summer trade, commencing at California and proceeding north; and, having in the course of the two seasons collected a sufficient cargo of peltries, would make the best of their way to China. Here they would sell their furs, take in teas, nankeens, and other merchandise, and return to Boston, after an absence of two or three years.

Source: Washington Irving, Astoria, volume 1 (Philadelphia: Carey, Lea, & Blanchard, 1836), pp. 3233.

Western Growth. Once they were secured as part of the United States, the western territories began to grow rapidly. The first national census in 1790 revealed that 120, 000 people already lived beyond the Appalachians. By this time Congress had provided for this growth with two ordinances that represent the most significant

achievements of the United States government under the Articles of Confederation. The first was the Land Ordinance of 1785, which set up a system for surveying and selling the public land of the Old Northwest. The area north of the Ohio River was to be systematically surveyed and divided into townships of six miles square, each with thirty-six sections of 640 acres, which were to be auctioned off at a minimum of one dollar per acre. Some land would be reserved for public benefit, including mineral deposits, and one section in each township was reserved for maintaining a public school. The Northwest Ordinance of 1787 provided for a government for the territory north of the Ohio River, allowing for subdivision of the entire area into from three to five smaller territories each of which would eventually become a state. Territories were to be under congressional government until the population reached sixty thousand, when they could apply for statehood. Finally, slavery was banned in this area. Ohio was the first state admitted under this process, on 1 March 1803.

Speculation. Although the Northwest Ordinance was designed for selling farms to individual settlers, these accounted for a small proportion of early western land sales. Surveying was expensive and went slowly at first, and the first sale of land, in the fall of 1787, brought in less money than Congress had hoped. In an effort to realize quicker and larger profits, Congress began to sell large tracts to speculative land companies, who would also take over the cost of surveying and selling the land to individuals. This continued the practice of colonial times, when Britain had often made large land grants to individuals or companies who would turn around and sell the land in smaller plots for a profit. Selling and reselling land was a principal economic activity in early America, so much that in many areas the government post of surveyor was widely sought after for the profits a man could make. The speculators of the 1780s received very favorable deals from the government with the help of Congressmen and other government insiders who were investors in the land companies. The Ohio Company of Associates bought one million acres for less than ten cents an acre, as did the Scioto Company and others. The government continued to try to get land into the hands of individuals, but the influence of the speculating companies increased with time. For example, Washington appointed Rufus Putnam, the chief representative of the Ohio Company, as the Northwest Territorys surveyor-general in 1796, and the secretary of the territory, Winthrop Sargent, was one of the companys original organizers.

Reform . The Land Law of 1800 brought some reform. Congress established four land districts, each with its own land office, so sales of land could be conducted on the spot, instead of in Washington. Credit arrangement could also be made under the new law, passed partly at the prompting of the Northwest Territorys congressional delegate, future president William Henry Harrison. It was also supported by Albert Gallatin, soon to become secretary of the treasury and responsible for overseeing land sales. Gallatins twelve-year tenure saw the rapid settlement of the entire Northwest Territory and the extension of the principles of land development into the area of the Louisiana Purchase. Despite reforms, the surveying and sale of land was marked by delay and fraud. There were frequent turnovers of surveyors, and most land office administrators were themselves speculating in land. The calculation and collection of sale prices were complicated by the many different currencies circulating at the time, and there were constant conflicts over prior land claims and the purchase and theft of lands from Native Americans. There was also intense pressure to sell land as quickly as possible in order to raise money for the government, especially after the beginning of the Embargo of 1807, which drastically reduced receipts from import taxes. Even with these difficulties, by the time the War of 1812 began, the government had sold more than four million acres for over $8, 500, 000. Sales remained strong even during the war, despite frontier conflicts with Indians and British troops.

Yazoo Land Claims . Western land speculation gave rise to one of the most important judicial decisions in the early national era, one with far-reaching effects on Americas commercial development. In 1795 the Georgia legislature sold large areas of land along the Yazoo River in what is today Alabama and Mississippi to several land companies. The companies got thirty-five million acres for less than two cents per acre. Bribes and other frauds were at the heart of these sales, and they were rescinded by a new legislature in 1796. There were several legal challenges before the case reached the Supreme Court in 1810. The court upheld the original sales, despite all the accusations of fraud, and maintained that a later legislature could not undo the work of the earlier one. This was an important statement of the sanctity of contract rights and did much to stabilize commercial transactions in early America. The land business, even when fraudulent, was a symbol of the economic growth facing the new nation.


Malcolm J. Rohrbough, The Land Office Business (New York: Oxford University Press, 1968).

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Land Development and Speculation

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