Chapter 5 - How Rich Grafters Got Possession of the Timber Lands of the Country
OWING to lack of space it is impossible to deal under this heading with more than a few examples. The history of the crimes committed by big capitalists in getting possession of the natural resources of the country would fill many volumes. The few cases mentioned are only typical examples of the methods by which all the big timber interests acquired their stolen property.
Let Gustavus Myers tell the story in his "History of the Great American Fortunes"--Vol. 3. All the statements made in this work are substantiated by Government records. First comes the case of the Southern Pacific Railroad Company.
The Pacific Quartet
"During the range of years when the Vanderbilts, Gould, Sage and Blair and various other railroad magnates were hurling themselves upward into the realms of masterful wealth, four other noted capitalists, whose careers were interjoined, were doing likewise in the Far West.
"This group was composed of Collis P. Huntington, Leland Stanford, Charles Crocker and Mark Hopkins.
"All four had migrated from the East to California after the discovery of gold on the Pacific Coast. There Huntington carried on a hardware and miners' supply store at Sacramento, and Hopkins became his partner; Crocker was likewise a small merchant, and Stanford was a lawyer. THE FOUR were not able co scrape together a pool of more than an insignificant sum with which to execute what was then considered one of the greatest and most' difficult railroad projects of modern times.
"But neither was the project itself of their conception, nor did they have to supply the funds. Years before they took hold of the work as a definite undertaking, the building of Pacific lines had been agitated and urged, and the Government had surveyed feasible routes. Not one of the quartet knew anything of railroad construction, nor had the least fundamental knowledge of how to equip and operate a railroad.
". . . If a man or a set of men could succeed in bribing Congress and the legislatures to donate land grants and advance the funds, it was a very simple matter to hire highly competent civil engineers to survey and build the routes, and employ good executives to run them after they were built.
"Upon organizing the Central Pacific Railroad Company in 1861, the Huntington group could not privately raise more than $195,000, of which amount they themselves put in about $50,000. This sum, ridiculously inadequate to build a railroad estimated to cost $25,000,000 was, however, enough and more than enough for certain well understood primary operations.
"With it expenses could be defrayed at the centers of legislation; petitions and memorials concocted; advocates paid, and newspapers subsidized. If the trick were well turned, a whole succession of franchises, special laws, land grants and money subsidies would follow. Thus we see that the original capital needed in many capitalist enterprises was not for the actual prosecution of the work, but for the purpose of bribery.
"A more temptingly opportune time for spoliative measures than the period of the Civil War could hardly have been found. Engrossed in the tumultuous upheavals of those convulsive years, the people had neither the patience nor disposition to keep close track of routine enactments in Congress or in the legislatures. At the very beginning of that war the Huntington group organized the Central Pacific Railroad Company, with a capital stock of $8,500,000, nearly the whole of which capital was fictitious, so far as actual investment of money was concerned. At once they directed their energies right to the core of things. Huntington took himself to Washington to lobby in Congress, while Stanford, elected governor of California, busied himself with similar ends at home. No visionaries were they, but practical men who knew how to proceed straightway.
"Stanford's work quickly bore fruit in California; the city of Sacramento was authorized to donate $400,000; Placer County to loan $550,000, and the State of California to hand over $2,100,000. At the same time Huntington was doing surpassing missionary duty in Congress. An act was passed in 1862 by which about $25,000,000 in Government 6-per-cent bonds and about 4,500,000 acres of public lands were placed at the disposal of the quartet.
"Two years later, at the very time when the Union Pacific coterie were corrupting Congress to get greater land grants and altered laws, Huntington again debauched Congress. An act was passed doubling the Central Pacific's land grant and relegating the government's claim on the Central Pacific to the under position of a second mortgage.
"The operations of the quartet were simple enough. Once they had obtained the requisite loans and gifts, they threw aside all pretenses, and openly and vigorously set out to defraud all within reach, not only the Federal Government but also States, counties, cities and investors.
Gross Corruption of Congress
"The process of corruption and theft was continued in the building of the Southern Pacific Railroad.
"In 1871, Congress chartered the building of the Texas & Pacific Railroad to run from Marshall, Texas, to San Diego, Cal., and presented the company with approximately 18,000,000 of public lands on condition that the road was to be completed in ten years; otherwise the land grant was to be declared forfeited. At the same time Congress chartered the Southern Pacific Railroad Company to build a line from El Paso, Texas, to San Francisco, and gave it a gift of about 5,000,000 of public lands. The Texas & Pacific project was owned by a group of capitalists headed by Scott of the Pennsylvania Railroad; the Huntington men were at the head of the Southern Pacific Railway Company.
"The next thing the Huntington group did was to force the Eastern capitalists out of the Texas & Pacific Railroad, absorb that line into their own system, and illegally grab the eighteen million acre land grant of the Texas and Pacific. Even under the law as it stood the Texas and Pacific was not entitled to the land grant. The House Committee on Judiciary on Aug. 3, 1882, after an investigation, declared that the Texas & Pacific Railroad Company had never completed any part of the route for which the land in New Mexico, Arizona and California was given; that it had never earned the grant; that it did not purpose to build the road for which it was chartered and endowed, and that it was transferring to the Southern Pacific Railroad Company 'all of the rights and titles to the land in question.' The committee on judiciary prepared a resolution declaring the forfeiture of the land grant, and urged its passage by Congress as a joint resolution. It did not pass.
A Summary of Their Plunderings
"Presenting the general results as nearly as official investigations could ascertain them, this is what Huntington and his associates did: They had received hundreds of millions of dollars in the form of money, bonds and lands from Government, States, counties and municipalities. As controllers of the Contract and Finance Company and other construction companies, they had turned over to themselves $142,000,000 in all for ostensible construction work. They had expended at least five million for corrupt political purposes. They had stupendously watered the stock of their railroads and with the cumulative proceeds of their thefts had secured control of nineteen distinct railway systems and of steamship lines also. They had by fraud robbed the Government of many millions of acres of land; they had defrauded the Government of the bulk of the funds that it had advanced; they refused to pay more than the merest nominal taxation, and they extorted onerous rates for transportation.
"In his message to the California Legislature, in 1869, Governor H. H. Haight had this to say:
" ' . . Our land system seems to be mainly formed to facilitate the acquisition of large bodies of land by capitalists or corporations, either as donations or at nominal prices.
" 'Numbers who purchased from the State lands sold as swamp or overflowed, find their farms claimed under railroad grants, and themselves involved in expensive contests before Registers and Land Offices.'
"Among the lands granted to the Central Pacific Railroad Company was the immense stretch of the finest timber land in Oregon and California, mentioned in the previous chanter.
The Northern Pacific Railroad
"The Northern Pacific Railroad was chartered in 1864. By act of Congress of July 2nd of that year it was given the right of way through the public domain, the right to take from the public lands material for construction, and an immense area of public lands in Montana, Idaho and other sections of the Northwest. These enormous privileges and grants were given to it at the identical time when the Union Pacific Railroad and other land-grant subsidized railroads were bribing Congress. As we have seen, the Union Pacific Railroad disbursed nearly $436,000 in securing the passage of the act of July 2nd, 1864, increasing the government money subsidy granted to it, and doubling its land grant. Doubtless the passage of the Northern Pacific Railroad Act was effected by the same means. In all, the Northern Pacific Railroad obtained about 57,000,000 acres of the public domain.
"The Northern Pacific Railroad was, therefore, endowed with a land grant forty miles wide running across the continent, west of the Missouri River. This land grant included vast stretches of the very richest timber lands."
The following additional extracts from the same book throw some light on the plundering of the public domain by other lumber companies.
The Colossal Thefts of Timber
"The huge fraudulent operations in the theft of timber from the public domain in Minnesota and other States and territories, and the bribery of public officials to connive at those thefts, were another example of the widespread and permeating fraud.
"Congress had passed an explicit act prohibiting depredations on the public timber lands, and providing a penalty for each violation of the law, of a fine not less than triple the value of the timber cut, destroyed or removed, and a term of imprisonment not to exceed twelve months. This law was effectively ignored or evaded by individual lumber capitalists or lumber corporations. In a long report, under orders, to United States Secretary of the Interior Robert McClelland, on February 12, 1854, James B. Estes, U. S. Timber Agent for Iowa, Minnesota and the Western District of Wisconsin, stated that in one Minnesota section alone-the Black River District-more than two hundred million feet of pine had been cut and carried away. 'On the Black River,' wrote Estes, 'are sixteen lumbering mills, all of which, until the past year, have been supported by logs taken from the public domain.'
" 'Upon the Chippewa and Red Cedar or Menominee rivers the same state of waste exists and has been carried on for a number of years. There are also upon these streams and their branches eight sawmills which doubtless cut,as an average, more than two millions of feet a year. The amount of timber cut at all of these mills is small compared with the actual waste upon the public lands, as there is now and has been for years a most extensive business of logging carried on to supply the lower markets of the Mississippi.'
" 'Along certain rivers besides those named,' Estes added, there were nineteen sawmills of steam and water power which are engaged in cutting, and doubtless consume, forty or fifty million feet of lumber yearly. In addition to this there has been a large traffic in rafting logs down the Mississippi to the St. Louis and other markets below.'
Bribery of Officers
"This immense amount of lumber was almost all stolen. Usually the Government timber agents were bribed to wink at this colossal system of fraud, and at other times they were likewise bribed to sell (what they had no legal authority to sell) permission or licenses, for insignificant payment to the Government, to cut timber from the public lands. Estes reported that he had instituted twenty-one indictments against some of these timber trespassers, and that among the number he had caused to be indicted, was Stunton, a former United States Timber Agent, for being accessory to those trespasses, in having sold to individuals permission to cut and waste.
"So entrenched was this system of enormous theft that when one honest Government official attempted to enforce the law, the whole lumber interests sought to discredit him and his aim and bring about his removal.
"Even further: not only did the lumber capitalists systematically seek to thwart the enforcement of the law by honest officials; all of the allied capitalists in the same region, and subsidized newspaper owners and hirelings joined in threatening and often using force to prevent the laws from being executed. This is clearly shown by the report made on Feb. 18, 1854, by I. W. Willard, U. S. Timber Agent for Western Michigan, to United States Secretary of the Interior McClelland. Willard estimated that 'there have been manufactured and shipped from there (the region north of Grand River and Lake Michigan) more than five hundred million feet of lumber within the last ten years, and more than seven-eighths of which was plundered from the public lands.'
Honest Officials Maligned and Prosecuted
"Willard caused thirty-seven of the trespassers to be indicted Then he wrote: 'The entire timber interests commenced a systematic war upon me. The newspapers at Chicago, it is believed at the instance of the trespassers, their attorneys and agents contained attacks daily upon the agent, characterizing his conduct as oppressive in the extreme, and the "Chicago Tribune" went so far as to counsel resistance by force. Meetings were held in the lumber regions, attended by lumber merchants from Chicago in some instances, at which violent harangues were made, and resolutions adopted, the temper of which was well calculated to excite a feeling leading to the most dangerous consequences.' In fact, the timber capitalists employed armed gangs to prevent the seizure of stolen lumber, and fleets of lake ships were requisitioned to carry off the lumber by stealth before the government agents could arrive to confiscate it.
Spoliation on a Great Scale
"At the behest of the lumber corporations, or of adventurers or politicians who saw a facile way of becoming multi-millionaires by the simple passage of an act, the 'Stone and Timber Act' was passed in 1878 by Congress. An amendment passed in 1892 made frauds still easier. This measure was one of those benevolent looking laws which, on its face, extended opportunities to the homesteader . . . Here was a way open for any individual homesteader to get one hundred and sixty acres of timber land for the low price at $2.50 an acre.
"This law, like the Desert Land Law, it turned out, was filled with cunningly drawn clauses sanctioning the worst forms of spoliation. Entire train loads of people, acting in collusion with the land grabbers, were transported by the lumber syndicates into the richest timber regions of the West, supplied with the funds to buy, and then each after having paid $2.50 per acre for one hundred and sixty acres, immediately transferred his or her allotment to the lumber corporations. Thus for $2.50 an acre the lumber syndicates obtained vast tracts of the finest lands worth, at the least, according to Government agents, $100 an acre, at a time, thirty-five years ago, when lumber was not nearly so costly as now.
"Under this one law--the Stone and Timber Act--irrespective of other complaisant laws, not less than $57,000,000 has been stolen in the last seven years alone from the Government, according to a statement made in Congress by Representative Hitchcock of Nebraska on May 5, 1908. He declared that 8,000,000 acres had been sold for $20,000,000 while the Department of the Interior had admitted in writing that the actual aggregate value of the land, at prevailing commercial prices, was $ 7,000,000. These lands, he asserted, had passed into the hands of the Lumber Trust, and their products were sold to the people of the United States at an advance of seventy per cent. This theft of $57,000,000 simply represented the years from 1901 to 1908; it is probable that the entire thefts for 10,395,639,960 acres, sold during the whole series of years since the Stone and Timber Act was passed, reach a much vaster amount. 'Wealthy speculators and powerful syndicates,' reported Commissioner Sparks, 'covet the public domain and a survey is the first step in the accomplishment of this desire.
" 'Prospectors employed by lumber firms and corporations seek out and report the most valuable timber tracts in California, Oregon, Washington Territory and elsewhere; settlers' applications are manufactured as a basis for survey; contracts are entered into and pushed through the General Land Office in hot haste; a skeleton survey is made . . . entry papers, made perfect in form by competent attorneys, are filed in bulk, and the manipulators enter into possession of the land. . . . This has been the course of proceeding heretofore.' "
The following from "The Lumber Industry," Part 2, report by the Bureau of Corporations, July 13, 1914, throws further light on the methods used by some of our "leading citizens" in plundering the people.
Land Frauds in Redwood Belt
"That 75 holders own nearly a million and a quarter acres of land indicates an unusually high degree of concentration, when it is considered that it has been attained without the presence in this region of any Federal land grant, such as tended to strengthen the concentration in Northeastern California, Western Oregon, and Southwestern Washington. This seems to have been done chiefly under the Federal land laws despite their initial restriction of 160 acres to the person. A passage from the report of the Public Lands Commission of February 21, 1880, indicates how the spirit of the law was violated:
" 'The commission visited the redwood producing portion of the State of California and saw little huts or kennels built of "shakes" that were totally unfit for human habitation and always had been, which were the sole improvements made under the homestead and pre-emption laws, and by means of which large areas of redwood forests, possessing great value, had been taken under pretense of settlement and cultivation, which were the purest fiction, never having any real existence in fact, but of which "due proof" had been made under the laws.
" 'In some sections of timber bearing country, where there should be, according to the "proofs" made, large settlements of industrious agriculturists engaged in tilling the soil, a primeval stillness reigns supreme, heightened and intensified by the grandeur of high mountain peaks, where farms should be according to the proofs made the mythical agriculturist having departed after making his "final proof" by perjury, which is an unfavorable commentary upon the operation of purely beneficent laws.' " A much more definite statement covering extensive frauds by which a large timber firm attempted to acquire 100,000 acres of choice red-wood lands in the Humboldt district, is found in the report of the Commissioner of the General Land Office for 1886:
"This case shows that the ramifications of the fraud extended into the General Land Office at Washington, and also shows some of the difficulties encountered by special agents when their discoveries implicate wealthy and influential persons. In 1883, a special agent of this office reported that this company had procured a large number of fraudulent entries, amounting, according to his estimates, to not less than 100,000 acres. The agent's report disclosed the scheme of fraud in all its details, and was supported by specific evidence in many cases. He also informed this office that he had been offered a bribe of $5,000 to suppress the facts and abandon the investigation, which he declined. This agent was subsequently suspended from duty, and afterwards dismissed from the service at the instance, as understood in this office, of great influence brought against him on the Pacific Coast and in Washington.
"A new agent was appointed, who reached his field of operations about the first of January last and entered upon the discharge of his duties. The agents of the company soon discovered his presence and business and attempted to defeat the investigation. Some of the witnesses were spirited out of the country; others were threatened and intimidated; spies were employed to watch and follow the agent and report the names of all persons who conversed with or called upon him; and on one occasion two persons who were about to enter the agent's room at his hotel for the purpose of conferring with him in reference to the entries, were knocked down and dragged away. Notwithstanding this the agent proceeded with his investigation and succeeded in obtaining a large amount of evidence. He found 90 of the entrymen and procured their affidavits as to the frauds and the manner in which they were induced to make the applications and affidavits.. This testimony embraced 47 of the patented cases. Several employee of the company gave sworn statements of their connection with the illegal transactions and of facts within their knowledge. Affidavits were also made by citizens of Eureka and other reliable persons, among which were the affidavits of sixteen business men, who were asked to make entry applications in the interest of the company and offered $50 each, but who declined to do so.
It appears that the persons composing this company went to work systematically and on an extensive scale, and to enable them to carry through their scheme they took into their association several wealthy men who furnished the necessary means. Expert surveyors and men well informed in regard to the character and value of timber were employed to locate and survey the lands. Others were then hired to go upon the streets of Eureka and elsewhere and find persons who could be induced to sign applications for land and transfer their interests to the company, a consideration of $50 being paid for each tract of 160 acres so secured. The company's agent received $5 for each applicant obtained. No effort seems to have been made to keep the matter secret, and all classes of people were approached by agents and principals of the company and asked to sign applications. Sailors were caught while in port and hurried into a saloon or to a certain notary public's office and induced to sign applications and convey the lands to a member of the firm. Farmers were stopped on their way to their homes, and merchants were called from their counters and persuaded to allow their names to be used to obtain title to the lands. The company's agent presented the applications to the register and receiver in blocks of as many as 25 at one time; paid the fees; had the proper notice published; hired men to make the proofs; paid for the lands and received the duplicate receipts; yet the register and receiver and some of the special agents appear to have been the only persons in the vicinity who were ignorant of the frauds."
The following is from the same report:
Manner of Acquisition of Timber Lands in Portions of Idaho Questioned
"A resolution introduced in the House of Representatives in 1910 (H. Res. 807, 61st Cong. 2nd Sess.) charged fraud in the acquisition of public lands by lumber companies in the State of Idaho, and directed a Congressional investigation of the matter. The territory involved was referred to as 'the Marble Creek district in the counties Shoshone, Kootenai, and Nez Perce,' the area covered being given as approximately 14 townships. The proposed resolution alleged, in general, that the Edward Rutledge Lumber Co. and other companies operating in the district had formed an unlawful combination, and were affiliated 'in what is commonly known as the Weyerhaeuser Lumber Syndicate,' and were acting together in fraudulently acquiring title to the public lands referred to, and in manufacturing and disposing of the lumber products of these lands. It further charged that many settlers then living upon these lands were being forcibly and fraudulently interfered with by this alleged syndicate, and that the market value of the white pine timber of this region had been forced down to not more than $6,000 per quarter section, when the actual value of many quarter sections was $35,000. It also alleged specific acts of fraud, conspiracy and intimidation in acquiring or attempting to acquire these lands. Certain officers agents of the State of Idaho were involved in the charges.
"The resolution further recited that Northern Pacific Scrip bought by the syndicate was filed on lands already occupied by settlers; that claim jumpers were employed, and contests entered in the local land office. Of the companies referred to in the 'Weyerhaeuser Lumber Syndicate' only two were named, the Edward Rutledge Lumber Co. and the 'Potlatch Association.'
"The resolution was referred to the Committee on Rules, but was never reported out of committee, and no further action was taken."