By Paul Wallace Gates
The admission of Kansas into the Union marks the half way point in the creation of states out of territories on the public domain. From the entrance of Ohio in 1803 to the admission of Alaska in 1959, 31 territories were admitted, Kansas being the 16th. All the territories went through much the same colonial experience in which they were politically subordinate to the national government. Their governors, who had the right of vetoing territorial legislation, judges, marshals, land and Indian officers, were appointed from Washington, their appointments coming to them as part of the patronage system. The development of the territories was seriously handicapped by inept, corrupt "broken-down hack politicians" sent to administer them in their early days. These men concentrated upon feathering their own nests by speculating in lands, railroads, and town lots to the neglect of public affairs.
Not all Kansas territorial officials were corrupt but most were inept, lacking in breadth of vision and all were hack politicians. In addition to drawing their generous salaries and speculating on the side, they were expected by Washington officialdom to foster the growth of the Democratic party and to make sure that the territory would be Proslavery. Consequently, they were not to permit the territory to develop normally, that is by drawing from border communities and older states immigrants who would create in Kansas their own institutions and determine for themselves their party affiliations. Instead, the territorial officials were to favor immigration from slave states, to frighten away immigrants from free communities, to control the elections of local officers, of members of the legislature and of the territorial delegate to congress by stuffing the ballot boxes and to turn speculative opportunities to friends of the government. Because persons from free states and some from slave states disliked being pushed around by these Proslavery bureaucrats and refused to follow their edicts, the territory became an active battleground between the bureaucrats backed by legitimacy and the military and the growing majority of the population which accepted Douglas' concept of popular sovereignty.
For six years Kansas was misgoverned, free elections were denied it, towns were sacked, immigrants were molested and expelled, some were tarred and feathered, and murders were not uncommon. Raids and counter-raids were made by the Proslavery bushwhackers and Antislavery jayhawkers. Statehood was denied because the people refused to condone slavery. Although the period of territorial servitude was shorter than that of most states, save California, which had no such period, and Nevada, the effects of that servitude lasted for many years and make the Kansas story unique. Greatly aggravating the Kansas situation was the fact that the national administration pursued policies that were extraordinarily harmful to new public land states and territories and nowhere were they more so than in Kansas.
The Kansas story was the more unique because of the presence of a solid tier of Indian reservations along the eastern border, inhabited by 10,000 intruded Indians who had been brought from Eastern communities and established on reservations ranging in size from 2,571 acres of the Christian Indians to the 1,600,000 acres of the New York Indians. When the Kansas-Nebraska act of May 30, 1854, opened the two territories to settlement, a flood of immigrants poured over these reserves before the Indian residents had—once again—been induced to surrender their land and move elsewhere. The complicated land problems thus created were not solved for many years and caused the settlers much confusion and uncertainty about titles and great expense.
The rapid growth rate that residents of Western states and territories confidently expected required large investments of capital which naturally had to come from outside. Territories and new states anxiously tried to attract capital by assuring absentee investors that they would be treated precisely as were local residents, that no discrimination would be permitted in assessing property and levying taxes, that foreclosures on delinquent loans would not be unduly obstructed, and that investments in territorial securities would be safe. Under such favorable conditions development capital poured in to snatch up the most promising opportunities for investment in the new communities. Among these attractive opportunities were investments in wild land and urban lots, loans at frontier rates of interest of 24 to 60 percent and more a year, banks, land grant railroads, franchises, urban industries, mines of precious or base metal, great stands of pine, redwood, and fir, and local government bonds offered at bargain prices.
Western residents who had rejoiced at the quick stimulus absentee capital gave to their communities later regretted its presence when they came to realize its obligation and sometimes long run oppressive effects. Not infrequently these investments in under-developed territories became subject to political attention, if not attack. When Ohio was moving toward statehood great chunks of its territory were held by New England and New Jersey capitalists whose ownership, combined with the capricious government policies of carpetbag officials created tensions and sectional feelings. Indiana and Illinois having sold their bonds at heavy discount to outside capitalists had, when hard pressed financially, to relinquish their state canal projects to the bondholders, and Illinois and Michigan had to surrender their promising state projected railroads to Eastern and foreign security owners. Michigan, Wisconsin, and Minnesota could do nothing to prevent their pine and mineral lands from passing to absentee owners and Iowa early became the victim of the absentee owners of its lands and railroads and of the Des Moines River Navigation Company, to the distress of the local people. Michigan was to derive little benefit from the exploitation of its rich Calumet and Hecla mines whose owners were to enrich Harvard University from their huge profits. When the pineries of the Lake states were approaching exhaustion, the leaders of the lumber industry bought enormous tracts of land in Southern public land states at a mere pittance to provide lumber for their Northern finishing mills. Southerners approved of these investments at the time but later expressed deep regret that control of these valuable resources had passed to outsiders with so little advantage to the section. At a much later time, a distinguished Texas writer-historian was to produce a polemic against absentee ownership of the resources of the South and West.
Kansas was conceived, staffed, promoted, and quarreled over by speculators to such a degree that one can almost say speculation in land, town lots, the location of county seats, railroad terminals and routes, and of the capital was the principal business of its people. Despite the incursion of the Border Ruffians and the Jayhawkers and the resulting Kansas conflict, the flow of capital to the territory was not seriously impaired; in fact it was stimulated to some degree by the struggle over slavery. Furthermore, the existence of the Indian lands along the eastern border of Kansas gave speculators unique opportunities that did not exist elsewhere.
During the 70 years preceding the adoption of the Kansas-Nebraska act congress had evolved a land system that by the 1850's was working reasonably well. It permitted persons moving west to settle upon and improve 160 acres of surveyed land and assured them preferential rights to buy their land at $1.25 an acre when it was finally offered at public sale. Since military bounty land warrants given veterans of previous wars were acceptable in lieu of cash, and could be purchased at between 80 cents and a dollar an acre, settlers could obtain a quarter section for as little as $128. It was not uncommon for two to four years to elapse between the time when the land was surveyed and settled and the land sales. In this interval settlers might save enough from the sale of their farm products or might arrange to borrow funds with which to buy their claims. But in Kansas the land system was to work rather differently and less advantageously for the settler.
Commonly, before a region was opened to settlement, it was the practice of the government to treat with the Indians for their land, remove them to new locations, survey the land, and establish land offices at which settlers could file their entries. But in Kansas the negotiations with the Indians had scarcely begun when the territorial act was passed. Furthermore, the Commissioner of Indian Affairs, convinced that the Indians should not be removed to another more remote frontier, allowed them to remain in eastern Kansas and allotted lands to them in severalty or urged them to surrender a part of their reserves as trust lands to be sold for their benefit and to accept diminished reserves which might in the future be divided into individual allotments. Some reservations, notably those of the Shawnees, the Pottawatomies, the Kickapoos, and the Delawares, were sharply reduced and a portion or all of the surrendered land became public domain. Settlement on the public lands was barred when the territory was opened on May 30 but 52 days later, on July 22, an act was passed permitting settlement on these still unsurveyed public lands. The lands of the Iowas, the Confederated Indians, and a portion of the Delawares, amounting to 860,000 acres were surrendered in trust. These lands did not become a part of the public domain and therefore subject to the general land laws, and settlement on them was interdicted until they had been surveyed, appraised, and sold at auction at the appraised price or better.
Probably nowhere in the United States did such a maze of land titles exist as in Kansas in its early days. Included were public unsurveyed lands that before July 22, 1854, were closed to settlement, trust lands also closed to settlement until the public auction took place, reserved lands held for future allotment, reserved lands the status of which was in doubt, allotments alienable with the consent of the great white father, inalienable allotments, allotments the status of which was uncertain, and 640-acre floats. Soon title questions were further complicated by tax delinquency and tax titles, questionable allotment sales, foreclosure decrees, and other liens and conflicting squatter claims.
The policy of transforming Indian reserves into trust lands, salable surpluses, and allotments breached the previous policy of making Indian land concessions part of the public domain. Another departure in Kansas from past policy was the sale of whole reserves to speculators instead of in quarter sections to settlers. Early in the territory's history capitalists dreamed of building railroads to the Pacific and began to maneuver for the right to buy some of the larger reserves since there seemed little chance of gaining a part of them through land grants. Political brokers such as Thomas Ewing, Jr., Robert G. Corwin, John P. Usher, Robert S. Stevens, and other Kansans and non-Kansans took part in the scramble for the reserves. Five separate sales amounting to 9,420,000 acres were made to railroad companies but the largest, the sale of the Osage tract of 8,000,000 acres, was not carried through. Even so, the railroads came into possession of well over a million and a half acres with which they were able to finance early construction of a portion of their lines. Since these reserves had not become part of the public domain Kansas did not get from them school sections to which it was entitled in public land areas. What is more important is that settlers could neither homestead nor preempt these lands and had to pay the railroads from two to five times the cost of a preemption right.
Not only did the federal government permit railroad promoters to acquire in Kansas extensive tracts of land through the purchase of whole reserves but it also was unusually generous to them in otherwise subsidizing and aiding railroads. In no other public land state were the railroads permitted to acquire almost a fifth of the state through grants and purchases.
The slowness with which surveys were extended in territorial Kansas greatly aggravated land questions. Not only was the government late in getting the surveys under way but the early surveys were improperly, if not fraudulently run and had to be done over again. Meantime interdictions against squatting on the allotments, the trust lands and on the public lands before July 22, 1854, and the threat of both the general land office and the Indian office to use force to eject settlers and to destroy their improvements had slight results. The land hungry settlers refused to concede there was any difference between public lands and trust lands, questioned the right of Indians to own allotments and swept over land of every description in search of locations on which to establish their claims. Claim warfare swiftly erupted and the claim associations or clubs that elsewhere provided protection against claim jumping, kept order at the public sales and prevented competitive bidding, here were less effective.
After July 22, 1854, settlers could take up and improve the unsurveyed public lands and have the use of them without expense until the expected auction. It was to their advantage to have the auction delayed as long as possible so that they could use their capital for improvements, farm machinery, and stock. With the movement for free homesteads gaining ground both within and outside the halls of congress, there seemed little need to hold auctions and little possibility of raising revenue from them. Consequently, no additional land was offered at auction in 1856 in the United States and only a million acres were offered in 1857, none of which was in Kansas.
In his annual message to congress in 1857 President James Buchanan expressed the Western view that the public lands should be reserved for settlers and that speculation should be discountenanced. As the depression of 1857 produced mounting deficits, however, his attitude changed. In his search for additional revenue, which could not come from the tariff, just lowered by his Southern supporters, he turned to the public lands and ordered large quantities into market, without, of course, limitations on purchases.
The first sales of Kansas land were the Indian trust lands, which were put up at auction in 1856 and 1857, prior to the panic. Strong criticism was aroused by the price at which these lands were appraised, by the fact that preemption was not permitted on them, and that they were not subject to the management of the general land office which commonly showed a more benevolent attitude toward settlers than the Indian office. This office usually was in opposition to settler interests while trying to defend the rights of its Indian wards. For the most part settler-claimants secured the lands on which they had established themselves but at the appraised price and for the vacant lands there was some competition. The entire 860,000 acres were sold for an average of $1.83 an acre or approximately 83 cents an acre more than settlers on the public lands had to pay if they used military warrants.
By the time the first public lands were advertised for sale the downturn in economic activity had set in. The closing of banks, falling prices and the declining demand for goods brought Kansas to a state of severe depression. A concerted demand for postponement of sales was voiced by all elements, Pro and Antislavery, administration and Douglas Democrats, and Republicans. Reluctantly, the administration deferred sales for a time but insisted they should be held in 1859.
Settlers who failed to purchase their claims when the land was offered at sale were no longer protected by their claim association or by the preemption law and ran the risk of seeing the land they had improved bought by speculators. Money was extremely tight in 1859 but nevertheless there were capitalists looking for opportunities to invest funds either in land or in loans to settlers at 24 to 60 per cent interest. Those who entered into such usurious agreements ran great risk but they had no other choice. Thousands of Kansans signed mortgages bearing these frontier interest rates to save their homes, only to lose them later through inability to meet such exactions.
Kansas attracted many capitalists who wished to invest in land as well as in frontier loans. A number of methods were used by these absentee investors. They could buy without limit both at the public land and trust land auctions and subsequently when the unsold public lands were classified as "offered" and subject to entry in any amount with cash, warrants, or scrip. They bought Indian allotments, Wyandotte floats, and in fact entire reserves. They connived at abuse of the preemption laws—which were intended to protect actual settlers—by hiring men to establish claims on the public domain and providing them with land warrants with which to purchase the preemptions after the auction. The preemptor perjured himself by signing a statement that he was not acting for anyone else and that the land was intended for his own use. When the patent was forthcoming it was conveyed to the speculator. They foreclosed on squatters to whom they had lent money to enter their claims as preemptions. In addition they could buy of the state, of land grant railroads or other speculators at a later time.
What was the source of the capital invested in Kansas land, the owners of which were willing to risk their funds in a territory wracked with internal dissension? Western agents seeking capital with which to make entries for settlers offered to guarantee 12 percent interest and to share all gains above that figure. This was all within the law since there was no usury legislation in Kansas. Accounts of these high rates circulated through the country, spread by letters from anxious settlers telling about their need for money and the interest people were willing to pay to preserve their claims. An observer of the land and loan business remarked prior to the public auction at Lecompton of 1859 that there were 15-20 agents who were lending warrants to settlers and taking mortgages on their property, all with capital furnished "from the States."
Extremists, both Northern and Southern, urged people to emigrate to Kansas and to purchase land to keep it out of the hands of the other side. There was some response to these appeals, more from the North, perhaps because Northerners were more certain of their moral rectitude. The New England Emigrant Aid Company raised $145,000 through donations and subscriptions from such successful capitalists as Amos A. Lawrence, John Murray Forbes, John Carter Brown, and Horace B. Claflin. It was the funds of this company that, under the leadership of Samuel C. Pomeroy and Charles Robinson, were used to assist emigrants, provide them with "Beecher's Bibles," establish depots for the settlers, lay out towns, build hotels, and set up grist- and sawmills. When the business was liquidated it was found that little was recoverable for distribution to the stockholders.
Contrary to expectations, some of the largest investors in Western lands, including Kansas lands, were Southerners. All but two Southern states were represented at the early Kansas land sales and some of these Southern purchasers came with an abundance of funds. Included were planters, wholesalers, tradesmen, bankers, merchants, and at least one congressman. Their individual investments in land and loans ranged as high as $30,000. Some of these investments were in no sense related to the efforts to keep Kansas a Southern dominated state but were the normal extension of the land and loan business which had attracted capitalists to Illinois, Iowa, and Wisconsin earlier. The firm of Easley & Willingham, for example, highly successful merchants of Halifax county, Virginia, had between two and three hundred thousand dollars invested in Western lands and loans, a portion of which was in Kansas. Williamson R. W. Cobb, an Alabama member of congress, had substantial investments in Nebraska in addition to smaller holdings in Kansas. Thomas Jefferson Buford of Alabama raised $24,000 from the sale of slaves and of his plantation to finance the recruitment of 400 men he planned to colonize in Kansas. These with other smaller Southern investments and numerous investments of Missourians in Kansas constituted quite a large total and led Jim Lane to lament in 1862 in the midst of a discussion in the senate on a confiscation bill that "We have in Kansas a larger proportion of rebel property than any other state in this Union."
For every Southern investor in Kansas land and loans there were three or more from the North. Some of them were concerned with keeping land out of the hands of the advocates of slavery but most Northern investments were primarily made for speculation and profit, whether they were loans to squatters, the purchase of well located property in towns and cities, wild land in remote areas, or railroad charters and land grants. Investments ranged from small purchases of a quarter or half section of land or loan of a 160-acre military land warrant to the $78,000 that the family of Thomas Ewing, Sr., sank in property in Leavenworth and the more than one hundred thousand dollars that Thaddeus H. Walker of Salem, N. Y., either lent to squatters or used to buy land.
Although during the Pierce-Buchanan administrations advocates of free homesteads had failed to secure the West's most favored legislation and consequently many thousands of settlers in Kansas, Minnesota, Nebraska, Wisconsin, Iowa, and California had been obliged to buy their claims with the help of the loan sharks, the strength of the homestead movement was growing. Indeed, it was extremely embarrassing for Democratic wheelhorses from Northern states to support the Buchanan veto of homestead, for they knew it was the kiss of death for them politically. Yet for the most part they went down the line for the veto and with Southern and land speculator opposition delayed homestead until 1862. One determined Alabama representative who fought hard to make Kansas a slave state and voted against the homestead bill in the house had a few months earlier invested $12,000 in Iowa and Nebraska land. The Southerner with the largest investment ' in Western lands, James S. Easley of Virginia, took comfort out of the fact that the veto of the homestead bill had improved the price of land warrants and land. A Wisconsin editor declared without reservation that it was the speculators who had defeated homestead prior to 1862.
Preston B. Plumb's Kanzas News, of Emporia, June 6, 1857, expressed the attitude of the more advanced land reformers when it maintained that all public lands should be withdrawn from sale, kept from the hands of the railroads and other speculators, and given only to actual settlers. Though Plumb was in agreement with Greeley and the advanced reformers of the East, many Kansans would not have gone quite that far. They were, however, clearly in favor of free homesteads, their two senators and representative gave the measure in 1862 full support and they doubtless would have agreed with the Kansas State Record of Topeka, which declared on June 4, 1862, that the successful enactment of the Homestead law was a blow at the land warrant and railroad lobby.
It was the misfortune of Kansas and other states in which there still remained public land that unrestricted cash sales and speculative purchases were not halted with the enactment of the homestead law. It may be asked why did the Republican party, which had so strongly committed itself to the interests of the small farmer and pioneer settler, permit sales to be continued after 1862 particularly in view of the fact that it was responsible for halting all sales in the five Southern public land states in 1866. The reason seems to be not so much a sensitivity to speculator interests, though this doubtless was a factor, but rather that congress was not ready to revise and rewrite the complicated public land laws. Timber land, fractional tracts, excess acreage of quarter sections, scattered pieces all continued to be sold. Furthermore, under existing law land once offered at public sale and unsold was thereafter subject to unlimited sale unless it was ordered withdrawn from market to permit railroads to make their selections of land. When the railroad route had been determined and the land grant selected, it was the practice to order the withdrawn lands not selected back into market and to offer them at public auction. The law may not have required such reoffering and an administration particularly susceptible to settler influence might have simply opened such land to homestead but this would have involved executive license which the officials of the general land office did not favor. Also, there still remained 65,913 military warrants amounting to 7,123,380 acres as of September, 1862, and 7,830,000 acres of agricultural college scrip—much of this was to be granted to the states only after the conclusion of the war—and to have denied the holders of the warrants or the purchasers of this scrip the right to make good selections would have been a clear breach of faith. If all the offered land had been withdrawn from sale in 1862, the military warrants would have been salable only to settlers who wished to use them in lieu of cash in preempting their claims; hence their market value would have been sharply reduced and the agricultural college scrip of the Eastern states would have become practically valueless—at least until 1870, when congress provided that it could be used like military warrants to enter preemptions.
The continuation of land sales and the reoffering of withdrawn but unselected land permitted the alienation of 2,655,000 acres in Kansas which were entered with cash, warrants, or scrip between 1863 and 1874. Some of this large acreage was entered by settlers as preemptions but great quantities were acquired for speculation by absentee and local capitalists.
Kansas was growing mightily in the years after the Civil War. People were flocking into the state by the tens of thousands reviving excited demand for land. Speculators, railroads, Indian allottees, the state with its education and college lands, and the federal government all found their holdings in keen demand and the better locations were bringing favorable prices. Settlers looking for the free land the government promised them and wishing not to get too far away from transportation facilities and the more humid eastern part of Kansas found, alas, that they had been anticipated by others and must go elsewhere. The large speculators' purchases, the railroad and state grants, the Indian allotments and the huge Osage reserve were subject only to sale. To find the elusive free land, seekers after the government's bounty had to go into central Kansas, which was certainly not unattractive but had its drawbacks. Furthermore, the speculators again threatened to anticipate settlers as they had earlier done in eastern Kansas.
The Agricultural college (Morrill) act led to the dumping on the market of a number of million acres of land scrip given to the Eastern states and this depressed the price of scrip well below a dollar an acre. It was snapped up by individual and group investors and over 800,000 acres was used in Kansas mostly to create large holdings. Thus Amos A. Lawrence who had invested heavily in the Emigrant Aid Company in the 1850's now entered 62,260 acres as a speculation for a philanthropic agency. Ezra Cornell, then looking for opportunities to locate a part of the 990,000 acres to which New York state was entitled under the Morrill act, entered 4,000 acres but subsequently determined to invest the bulk of New York's scrip in the pineries of Wisconsin. A representative of Brown University, then the beneficiary of Rhode Island's scrip, entered 40,000 acres. These, with numerous other large entries swept into private hands a considerable part of the better land in Marion, Dickinson, Chase, Washington, and Butler counties.
Some lands east of the 97th meridian were open to homesteading after 1862. Those offering fair promise were speedily taken up and thereafter the land seekers had to go ever farther west to find free land. Fortunately for the land seekers the public lands somewhat beyond the 97th meridian did not fall into the classification of "offered" land and consequently speculators could not anticipate them. Outside the areas of the railroad grants, and the Osage reserve beyond the 97th meridian, then, the homestead principal became a reality for settlers. Even within the railroad grants they could homestead upon the government reserved sections but could only have 80 acres. Eighty-acre tracts were too small for successful farming operations in central and western Kansas and settlers had to buy additional land from the railroad.
In 1863, the first year homestead filings were permitted, 1,149 Kansans made their selections of a quarter section and began the long and difficult task of creating farms for themselves. The number diminished considerably in the years immediately following and not until 1866 was it back to the level of 1863. In 1870 the number exceeded five thousand, and in 1871 and 1872 it reached a peak of 9,456 and 9,093. By that time 31,700 persons had filed on land and thereby recorded their intention of proving up at the end of five years. There was, however, a marked lag between the original entries and the final entries five years later. Of the 1863 entries only 39% proved up in 1868 and got title to their tracts, and of the entries of the first five years from 1863 to 1868 only 31% had proved up and gained title five years later. Thereafter the rate of success in proving up within the minimum time the law allowed fluctuated somewhat but did not rise above 50 percent. However, an increasing number of settlers commuted their homesteads to preemption before the five years had lapsed in order to gain title on which they could borrow for farm improvements.
During the period the homestead law operated in Kansas, homesteads were filed on approximately one half the land in the state, and 48% of this area was finally proved up and patented as homestead. An additional 9% of the area on which homesteads had been entered was established, was commuted to preemption at $1.25 an acre, and patented. Homestead had come too late to permit settlers in eastern Kansas to take advantage of it. It worked best in central Kansas but even here much of the best land was acquired by speculators in anticipation of the coming settlers. Only in the area roughly beyond the 97th meridian and outside the Osage reserve and the railroad grants were settlers given complete access to public land through homestead. There, the hazards of farm making were greater and the proportion of success in attaining ownership was little over half.
The welcome underdeveloped Kansas gave to outside capital investments soon wore off as the interest rates demanded became burdensome. Kansans tolerated the 24 to 60% interest charged for mortgage funds in the territorial period while extending sympathy to the settlers who had to borrow under such conditions. Blame for the hardships the rates caused was placed not on the money lenders but on Buchanan and the Democratic party for ordering land into market when funds were so tight and for defeating the move for free homesteads. Nevertheless from the outset there were critics who condemned usury, warned settlers that they would have difficulty in meeting their payments and predicted that from a half to two thirds of the lands thus mortgaged to "loan sharks" would ultimately "find their way into the maws of these animals."
The success farm makers had in retiring their mortgages undertaken at such excessive rates of interest can only be determined by minute studies of county records. Kansas was almost continually in a state of turmoil from its opening in 1854 till after the Civil War and even after 1865 portions of the states were troubled by claim warfare, settler-railroad conflicts and bickering over Indian titles. During this long period of strife it was not easy for settlers to pursue with the regularity and success the process of farm making that was under way on more peaceful frontiers. In fact the progress made during these troubled years in Kansas is a remarkable achievement. Available statistics do show that many settlers failed to meet their obligations. Forty-five of 102 Osage county mortgages dated 1858 to 1860 were foreclosed between 1863 and 1865. Eighty-one of 246 mortgages recorded in Anderson county between 1857 and 1861 were foreclosed between 1860 and 1872. Fifty-four of the 366 mortgages recorded in Lyon county between 1857 and 1861 were later foreclosed after interest had piled up to two and three times the original amount of the loans. Furthermore, some of the early Kansas mortgages were not released for 30 and more years. Possibly the prediction that from a half to two thirds of the mortgages would never be paid off was too pessimistic but the fact remains that a mountain of debt was established that was to burden farmers for decades to come.
Any rate of interest was permitted in territorial Kansas until 1860, there were no grounds for pleading usury, and interest could be compounded once a year. In that year the legislature enacted that where no rate was specified in an instrument 10 percent was to apply and the maximum that could be charged was made 20 percent. The statute attempted to make illegal and uncollectible usurious interest hidden in the principal of notes or mortgages but this was not easy to do. Lenders could arrange to enter a tract for a settler, take the title in their own name and resell to the settler at any price they wished. Mortgage loans also continued to be made with interest in excess of the 20 percent but there was more risk because borrowers could plead usury in court proceedings. More commonly, the legal maximum was adhered to. In 1863 interest, where not named, was to be seven percent and the maximum was reduced to 12 percent. Here again lenders found another way to get around the maximum by charging a commission as high as six percent which might be shared with the agent negotiating the loan. Since loans were renegotiated each year, if not repaid, a new commission was required so that to all intents and purposes 18 percent continued to be the rate the farmer had to pay for some time after 1870.
There is little evidence that the limitations, whether effective or not, were instrumental in reducing the flow of risk capital into Kansas. At the very time when restrictions were being placed on usury rates the territorial relief convention, called to find means of aiding the drought-stricken people, was considering a plan for the establishment of a loan fund to be provided by Eastern capitalists for loans on crop liens to settlers whose land was already mortgaged and who had no means with which to purchase seed or farm machinery. On such credit interest would presumably be close to the 10 or 20 percent per month that prevailed on high risk loans in 1858 such as crop liens or chattel mortgages.
In the light of the experience of Kansans with usury loans before 1861 and the high rate of foreclosures, it might be expected that settlers would be less inclined to enter into such transactions after the adoption of the homestead law and that borrowing would not be so essential. The fact is that no matter what the rate of interest, if funds were available settlers wanted to borrow either to finance speedier improvements or to take title so as to unload land upon unwary Easterners. If the settler got more from the loan than he could expect on an outright sale, his attitude was "foreclose and be damned." Seth Humphrey and Allan Bogue have shown how extensive was this racket of excessive appraisals, high loans, and voluntary relinquishment to the lender in Kansas and the Dakotas. While settlers were thus taking advantage of the mortgage companies and other credit agencies, Western states in periods of agricultural distress were showing their disapproval of the operations of these agencies by attempting to tax mortgages, allowing a year's time for redemption of foreclosed property, and by other means making the role of the money lender less profitable.
Popular fiction pilloried the local money lender and the agents of absentee capitalists but the absentee land owners who accumulated land for speculative purposes and had no intention of developing their holdings were much more disliked. The Emporia News of February 16, 1867, expressed this attitude well: "Such monopolies are a crime and a curse. We are crippled and kept down by them. . . ."
The New England Emigrant Aid Company's large investment in hotels, grist- and sawmills and town lots would normally have aroused little opposition because clearly the company was not a mere speculative enterprise. Opposition to its operations, expressed in the destruction of its Lawrence hotel, was not because it was the largest capitalistic combination investing in Kansas but rather because it was more of a colonization scheme dedicated to making Kansas free. In the territorial period no large investments were made by land companies comparable to the huge purchases in Illinois, Michigan, Mississippi, and Arkansas by the American Land Company and a score of other companies of Eastern capitalists. It took courage to invest in Kansas during its most troublesome years.
In the following decade resentment was expressed against the Missouri River, Fort Scott and Gulf railroad and the Leavenworth, Lawrence and Galveston railroad on account of their attempts to control Indian lands. Indeed, there are few instances in Western history in which settler hatred was expressed so angrily against railroads as it was against these lines then forming a part of the Joy system. It should be stressed, however, that the attacks upon the Joy railroads were not made because they were railroads or because they were buying or attempting to buy great quantities of land. Rather, these attacks were directed at the underhanded and deceitful way the government officials had sold the Cherokee Neutral tract and arranged for the sale of the Osage tract so as to make the public land laws inapplicable to them and to deprive the settlers on them of the benefits of the homestead law. Kansas wanted railroads, was willing to give them major concessions, but its residents could not look favorably upon the devices by which the public land laws were being set aside, particularly since Kansas had already suffered so seriously from the abusive actions of Buchanan and his party in the 1850's. To have the Lincoln-Johnson administration pursue equally heartless policies seemed unpardonable.
Settler groups in Kansas combined with the land reform leaders in congress and, ably supported by Horace Greeley's New York TRIBUNE, carried out a well-organized campaign to defeat these sales of Indian lands. They failed to secure a cancellation of the sale of the Neutral tract to Joy and the Fort Scott railroad but they won a notable victory in preventing the sale of the huge Osage reserve. To make doubly sure that no further sales would be negotiated by the Indian office through the treaty-making power and then submitted solely to the senate for approval, the combination of settler representatives and land reformers secured the adoption of a measure that ended the treaty-making method of dealing with Indians. Thus was halted the most dangerous attack upon the democratic land system of the federal government. Meantime, the railroads had secured close to a million and a half acres on credit at modest prices and were aided by the government in evicting the hundreds, indeed thousands, of squatters who had taken up residence on the tracts.
The first opportunity Kansans had to strike at absentee owners who were not developing their land came during the Civil War. A considerable number of Southerners had bought land in Kansas during the territorial period, as we have seen. With the South at war with the North, congress provided for the confiscation of property of persons in rebellion against the United States. The Kansas legislature strengthened the federal move by enacting that no person in rebellion against the United States could through others prosecute claims, thus making it impossible for rebels to collect on mortgages.
The constitutional problems involved in confiscating the property of persons engaged in civil war were immense, indeed almost insurmountable, and were made even more so by the disinclination of the Lincoln administration to prosecute the laws with vigor. Radical Republican papers urged that proceedings should be pressed and all titles of rebels confiscated. Thus, Sol Miller's White Cloud Kansas Chief of August 6, 1863, mentioned five Virginians holding land in Doniphan county who it presumed were rebels and urged that action be taken to confiscate their land. In neighboring Nebraska a memorial of the territorial legislature mentioned Southern holdings amounting to 200,000 acres and urged that all be confiscated.
Throughout the North confiscation proceedings were pushed slowly, if at all, and such proceeds as were obtained seem to have gone chiefly into the hands of officers and informers. James G. Randall found that there were "many forfeitures" in Kansas and that in only two other states and the District of Columbia was more property forfeited and sold. Yet none of the estimated $30,000 received for the sale of forfeited property found its way into the treasury. Since such forfeited property when sold at execution brought far less than its real worth—a quarter section of forfeited land in Jefferson county, for example, sold for $25—because of questions concerning the title, the $30,000 might well represent property with real worth of ten or more times that figure. The operation of the confiscation laws in Kansas is well worthy of study.
Over the course of many years frontier people had devised numerous ways of making absentee ownership uncomfortable, if not unprofitable. Kansas experimented with all such ways and added its own quirks to time tried procedures, the object being either to discourage such purchases or to frighten the holders into disposing of their tracts. At a number of public sales of government land where settlers had been unable to arrange financing to purchase their claims and had lost the benefit of the preemption law, massive action by settlers was threatened against anyone attempting to take advantage of the situation in much the same way that claim associations functioned prior to the sale. A meeting at Atchison on July 11, 1860, urged that settlers assemble en massein an orderly, peaceful, and quiet manner and prevent the advertised sales from being held. The Neosho Valley Register of Burlington, one of the most radical of Kansas papers, urged people "to do everything in their power to prevent the vacant land getting into the claws of the infernal nuisances, the land speculators." It expressed the hope that the lands of nonresidents would be "taxed so steeply and the owners harassed so vigorously," that they would gladly sell at any price. "Keep away, sharks! We give you fair warning."
Taxation was a major weapon that was to be used to force land improvement or transfer of ownership to residents. As early as 1859 capitalists were complaining about Kansas being discriminatory. It was charged that a Leavenworth county highway tax of $16 per quarter section was illegal because it allowed residents to work the tax out at $4 a day but required nonresidents to pay in cash. Kansas tax assessors were "robbers," said a Washington banker. When the taxes reached six per cent of a fair valuation the banker intimated that capital would be withdrawn from the territory if a limit was not placed on the exactions. Thereafter complaints were continually made by nonresidents of the heavy burden of taxes, the unfair assessments, the difficulty of making payments, the fact that local scrip at discount was available to residents, the heavy cost of redeeming tax delinquent lands that had been advertised and sold, and the extraordinary expenditures of the taxing jurisdictions. Anyone who has used 19th century newspapers is familiar with the huge tax delinquent lists that appeared every year and were one of the main sources of revenue to frontier papers. Many absentee owners, particularly those having small investments insufficient to justify regular attention by themselves or agents, were worn down by the difficulties of protecting their land against intrusions, arranging for leasing, and keeping their taxes paid and their land off the penalty list. They soon found their costs rising more rapidly than land values and sold at disillusioningly low prices. Tax warfare between residents and non-residents, including the land grant railroads, only subsided when residents became possessed of sufficient property and improvements to join with absentee owners in fighting expenditures, high assessments, and high taxes.
Occupying claimant laws to protect settlers in their improvements against absentee owners who were seeking to eject them were in use a century before Kansas was opened to settlement. Early experiments were made with such laws in Virginia and Kentucky where titles were in confusion. Persons looking for public land and finding tracts where no formal surveys had been made, no corners or other identifying marks established to show ownership could easily err in assuming these tracts to be open to settlement. Years might pass before they learned of adverse possession by some absentee, during which time they would presumably have made substantial improvements. The occupancy laws were framed to assure such persons the value of their improvements, as distinguished from the value of the land without improvements.
The territory of Kansas enacted its first and broadest occupancy law in 1855, borrowing its provisions from a Missouri act. The law provided that in an ejectment action brought by a patent owner against a settler having a settlement right or other color of title, the settler might recover in a court of equity compensation for all "valuable and lasting improvements" made by him prior to the notification of adverse possession. If the value of the improvements exceeded the value of the land alone the occupying claimant might have the land by paying the patent owner the simple value of the land. Since awards for improvements were made by local juries it is understandable that under such laws transfers of property from absentee investors to local residents took place without major compensation being paid. Many times had occupancy laws been challenged in the courts as placing limitations on the rights of property owners and on occasion they had been declared invalid, in one famous case by the Supreme Court of the United States, but to no avail. So well established had they become, particularly in Western states, that no ancient rights of property, no invocation of the impairment clause of the federal constitution seemingly could stand in the way of their functioning.
In 1862 Kansas substituted the Ohio occupancy law for that of Missouri and in doing so weakened the occupying claimants' right slightly for it left out the words settlement right. Henceforth persons having only a settlement right without tax title, Indian allotment, or other lien could not expect to gain through litigation in equity the value of his improvements if a patent owner won an ejectment suit against him. In 1873 the rights of occupying claimants were extended by an act declaring that a claimant with a color of title could not be evicted from his land until he had been paid the full value of his improvements. Thus did Kansas through legislation and later through court interpretation "show the highest consideration for the unsuccessful occupying claimant, and evinces the greatest solicitude in providing for an adjustment of his rights . . . upon the most liberal principles of equity."
The following year congress was persuaded to adopt an occupying claimant's law that would permit settlers to recover the value of their improvements they had made on open land for which they had gained a patent only later to be informed that the government had revoked it because a railroad had prior rights to the land. Since recovery would be from a railroad or from a large purchaser of its land and very likely an absentee owner, Kansas would welcome such a measure.
By the late 1860's and 1870's Kansas was coming to regret the welcome she had earlier given to outside capital. With more than 12,000,000 acres of lands in the hands of railroads and individual capitalists, mostly absentees, who were anxious to sell but only at high prices, Kansans were troubled because this large quantity of land could not be homesteaded and retarded the development of the state. They saw the Indian reservations falling to these outside interests one by one but only when the Osage tract was threatened were the local people able to bring sufficient pressure to bear to prevent the sale. They were disturbed that much of the railroad land was tax exempt and not contributing to the support of local government and schools. As one Granger said, it was not railroads that were to be feared, they contributed to the growth of communities, it was the growing land monopoly that was retarding growth, contributing to heavy debts and to the growth of tenancy. Kansans tried to curb the exactions of outside capitalists by usury laws and to hasten the breakup of absentee holdings by heavy assessments and taxes, occupying claimants laws and information leading to action against Southern holders of land. Later they were to experiment with anti-alien holding measures, political action to make the railroads take title to their lands so they would be subject to local taxes, and even to forfeiture of land grants. They resorted to great extravagance in newly settled areas where there was little settler owned land to induce nonresidents to dispose of their holdings. After 1870, as before, Kansas continued to regard land and credit problems as their most vital issues.
Kansas remained in the 1870's an underdeveloped state, still anxious to attract capital for further expansion of its railroad network, for credit to the newly developing farm regions of its extreme western counties and for the construction of its towns and cities. Yet it was not altogether happy about absentee ownership of its railroads and much of its land, or the mortgage indebtedness owed to Eastern investors. The annual obligations on these investments were heavy, particularly in the hard times following the Panic of 1873. The ambivalent position of the state is shown in its welcome of new capital while it was doing its utmost to confiscate Southern investments, its devious ways of making absentee ownership of land unprofitable, its efforts to restrict interest rates and its use of the occupying claimant legislation. These measures were mostly mild and did not halt or appreciably affect the flow of capital. The ground was laid, however, for more concerted attacks upon absentee capitalists and speculators when conditions became more aggravated as in the years of the Populist revolt.
From the Kansas Historical Quarterly, XXXI (Spring 1965), pp. 41-61. Reprinted with permission of the Kansas State Historical Society.
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