"
Conservative *
corned , the grants represent a vnlno of
1498,607.208 * * * and if to this is
added the milengo of the southern land
grant roads * * * the laud dona
tion would represent in value about
$500,000,000. " This estimate seems to
bo much wider of the mark than your
statement of the total acreage. The
figures indicating at what prices sales of
these lands have been made , are ad
mittedly incomplete and imperfect.
Such as are at command , include in
terest and do not tnko into account the
cost of disposiug of the lands , which
has been very largo , nor expenditures
for taxes , deduction from mail pay ,
and many other items necessary to a
correct statement. These sale prices ,
moreover , are not a fair nor proper
criterion of the value of the grants.
They represent values which the rail
roads have themselves created , in largo
measure , and not values which the
government surrendered.
In the June , 1898 , number of the
"Journal of Political "
Economy , pub
lished by the University of Chicago , is
an able review by Mr. "W. H. Allen , of
the value to the state of the charter tax
of seven per cent , upon gross earnings ,
imposed upon the Illinois Central com
pany , as one of the conditions of its
laud grant. This discussion is not
from the railroad standpoint , in any
sense. Mr. Allen said : "In determin
ing the principle represented by the
lauds , wo must take account of the ac
tual value of the lauds in 1851. The
values which the railroad compauy waste
to receive for the lauds were not fore
seen , and the state could justly claim
compensation ouly for the values it
surrendered. The lands had been of
fered by the general government at
$1.35 per acre , without finding buyers ,
but as soon as the lauds were granted
to the railroad company , the miuimum
price for government as well as rail
road lauds became $2 50. More than
this they were sure to bring , but only
in case the private corporation bring
in the road to develop them. That is ,
from the standpoint of the state in 1851 ,
$3 50 per acre would have been an out
side figure. "
The method suggested in your article
for arriving at value of million of acres
from "basis of last sales , " or "the prices
at which the company is holding its
lauds or "sales recently reported , " etc. ,
etc. , are certainly not acceptable.
While in Iowa , Illinois , Minnesota
and other states , the grants covered
some lauds which were of the best
quality , it is a well known fact that the
grants of large area , notably those of
the Northern Pacific , Central Pacific ,
Texas & Pacific , Atlantic & Pacific , and
virtually all the southern grants , em
braced millions of acres that have no
pecuniary value. They are simply bar
ren wastes of desert or swamp. They
can never be sold for enough to repay
taxes and ihe expenses of survey and
sale. In an address in 1893 , before a
congressional committee , resisting an
attempt to further reduce the mail pay
of land grant roads , Hon. E. B. Stahl-
man , representing the Southern Rail
way and Steamship Association , said :
"Tho laud granted in Alabama con
sisted of hills and mountains , not sus
ceptible of cultivation. The Florida
lands wore sand hills , thinly covered
with small pine of little value. Of
those , the best have been sold at 70 cents
per aero. The companies cannot realize
25 cents per acre on what remains un
sold. "When the grants were made ,
their value could not have exceeded
cents per acre. Lauds of greater value
were sold all through Florida and Ala
bama for that price. " More than
eleven million acres have been patented
to railroads in the southern states and
an estimated average value when grant
ed of 40 cents per acre seems large.
Your article states that the grant to
the St. Louis & San Francisco Compauy
was 1,860,586 acres. The grant was in
fact for 1,668,000 acres in Missouri , and
concerning its value , the laud com
missioner says : "Fifty per cent of this
grant was wholly worthless ; 80 per cent
was fairami similar lauds sold for 25
euts per acre ; the remaining 20 per
ent were worth one dollar per acre. "
Concerning the Atlantic & Pacific
grant your article says : "This land
rant is reported as having sold at an
average of $5.50 per acre , " and you
have estimated the whole at $8.00 per
acre , or $75,725,960. The vice president
of that company says : "The company
sold 8,500,000 acres at 75 cents per acre ,
1,058,560 acres at 50 cents per aero to a
cattle company , and 259,000 acres at 70
cents per aero , an average of 87 cents
per acre , or $4,670,000. The taxes and
expense of selling the lands to date
have been $622,000 , the mail pay de
ductions $480,000 and large deductions
on account of transportation of troops
and munitions of war. The company
would be glad to sell all the land it now
owns or will receive at 25 cents per
acre. There is no demand for it and
the truth is , it cannot be sold for any
sum. "
Taking the largest view possible for
this grant , 5,000.000 is a liberal estimate
of its entire value , or less than one-
fifteenth the amount stated in your
article.
It is within my personal knowledge
that in southwestern Iowa , which is to
day one of the finest farming regions
in the world , as late as 1860 , and five
years after the grant was made , lands
of the best character were freely bought
at 70 cents per acre , from settlers who
had paid the government $1.25. The
railroad was not yet built , there was no
market , and the lands had little value.
These figures are given , not because
the selling prices furnish a criterion for
determining the value surrendered by
B-r
the government to the companies , but
for the purpose of suggesting that any
general estimate of value seems worth
less , which does not undertake to
classify the lands and make a dis-
tincton between the good and the poor
lands.
In the states of Illinois , Iowa , Minnesota
seta , Wisconsin , Michigan , North M
I
Dakota , Missouri and California , there
wore granted in round numbers , about
40,000,000 acres , and a liberal estimate
of their value surrendered by the govern
ment , that is , when granted , even'if
estimated upon speculative grounds , I1
would be two dollars per acre. An es- ,
timate of 40 cents per aero for the re
maining 50,000,000 acres is believed to
bo large.
The railroad land grants of the United
States , therefore , instead of amounting
to 150,000,000 acres worth $500,000,000 ,
ad stated in your article , do not probably
exceed , in fact , 90,000,000 acres , of the
extreme value of $100,000,000.
Regarded as a contribution towards
the cost of building the roads as they
exist today , this amount seems almost
insignificant. The cost of the railroads
in the present Burlington system was
much over $250,000,000. There are 10
laud grant roads , whose aggregate cost
amouuts to more than $3,000,000,000.
Some Burdens Attached to T.und Grunts.
If the view is acceptable that in stat
ing the worth of the grants , the values
surrendered by the government should
be made the test , then the question of
burdens in the way of taxes , expense
of selling and similar items diminishing
the proceeds from sales , is not material.
The amount , however , of other burdens
is much larger than is generally sup
posed. As Mr. Fish has recalled to
mind , the Illinois Central company has
already paid into the state treasury
nearly $18,000,000 , being the annual tax
of seven per cent upon gross earn
ings imposed upon that company as a
condition of the grant. This is iu lieu
of all other taxes , and as the ordinary
levies would amount to about half that
sum , it is proper to say that the com
pany has repaid the state $9,000,000 in
cash on account of its land grant. This
payment is to continue perpetually in
an increasing ratio , if business in
creases , and now averages $642,000
yearly.
There appears to be no reason why
the Illinois Central company might not ,
iu 1850 , have purchased from the govern
ment every acre of this land at the
open price of $1.25 per acre , that is , for
the sum of $3,250,000. It has already
paid $9,000,000 in one item and must
continue to pay for all time to come.
Who made the better bargain in that
case ? ,
In the year 1876 , there was inserted l
at the instance of Mr. Holman , of
Indiana , into the post-office appropria
tion bill , a most unjust proviso , that
u *
