Land Grants and Speculation




The policies and the vehicle by which the title of land passed from the government to those farmers who actually settled the ground has always fascinated me.

The ordinance of 1785 initially laid out the orderly protocol by which the Western Territories were to be settled and incorporated into townships.  Under the ordinance, each township was allotted 640 acres, in the expectation that no single farmer would be able to afford all 640 acres and that groups of farmers would join together.  However, during the 1790’s, the Federalist Party, in control of the national government, favored the sale of large parcels of land to wealthy speculators, who bought the parcels in anticipation of their rising value and then sold them in smaller pieces to farmers.  To this end, the Federalists passed a law setting the minimum individual purchases at 640 acres and the minimum price at two dollars per acre.

Thomas Jefferson quickly set about reversing this trend once the Republicans came into power.  Jefferson believed that small farmers should control the West.  The Land Law of 1800 reduced the minimum individual purchase of land in the West to 320 acres.  That minimum was slashed to 160 acres in 1804, and again in 1820 to 80 acres.  By 1832, the minimum land purchase was set at 40 acres, and the minimum price per acre had steadily fallen off to about a dollar per acre.

The involvement of the speculator, creation of new Bank Charters and the influx of huge amounts of capital are subjects of future discussions.

By 1835, almost 4 times as much land had been offered at auction as had been sold.

Ceded lands                            268,348,942 acres

Surveyed and offered land     166,897,462 acres

Surveyed and unsold land      122,397,462 acres

Land sold                                  44,499,620 acres

A group of capitalists lending Eastern funds was Cook & Sargent of Davenport, Iowa, and their various Western associates.  With Boston funds, they established a bank, issued currency, and made entries for squatters and for absentee investors to the amount of 170,000 acres.  Their business prospered for more than a decade, enabling them to establish branches at every land-office town in Iowa, to push aggressively the Mississippi and Missouri Railroad (which became the Rock Island), and to become one of the most powerful banking and real-estate firms in Iowa.  Overcommitments and too sanguine (hopeful or confident) expectations brought them to bankruptcy in 1859.

The reason that I mention these two speculators is that my Great-Grandfather purchased his first and second 80 acres in Clinton County, Iowa from George and Mary Sargent of Scott County in the year of 1854.  The price was $116 and $150 respectfully; that is $1.45 and $1.875/acre.  Two years later, in 1856, he purchased another 80 acres from Ebenzer and Clussa Cook for $150.  Then in 1859, he purchased 80 acres, which lay between two of his parcels for $240 ($3.00/ acre).



The Panic of 1857, and the resulting decline in farm commodity prices, was felt immediately in the West.  With their income drying up, farmers were unable to meet payments on obligations which fell into default.  A despairing Illinois farmer wrote:

“The financial panic of the East has cast its dark shadow over Illinois.  There is little money in circulation….Everything down to the lowest figure.  We are overflowing in grain of all kinds and it is worth little or nothing.  Wheat down to 50 cents, oats 17cents and still going down; cows that could not be bought for $30 three months ago are now down to $18.”

Default on mortgage obligations and tax delinquency was widespread.  An Iowa moneylender gave public notice to 109 debtors early in 1860 of his intention to foreclose the mortgages he held on their land.  In Minnesota, a highly successful banker, note shaver, and moneylender foreclosed thirty-nine of fifty-eight mortgages drawn between 1857 and 1861; nineteen were paid in full.  The Whites, Easley, Willingham and numerous other Eastern capitalists likewise had to protect their equities in thousands of scattered farms by foreclosing.  Persons losing their farms through failure to pay were permitted to remain on them as cash tenants until they could buy again or until other buyers appeared.  In this way, the frontier became saddled with debt, and tenancy appeared early and continued to increase as the capital cost of farming grew.

The policies of the Buchanan administration deepened the farmers’ distress.  In his efforts to raise additional revenues from the public lands during the depression years following 1857, Buchanan ordered into the market great tracts of land in Iowa, Wisconsin, Kansas, Nebraska, and Minnesota on which many thousands of settlers had established their claims.

Finally, in 1854, Congress graduated the price of land in proportion to the length of time it had been on the market.  Land offered and unsold for ten years was priced at $1.00 an acre, and by progressive downward steps, the price was reduced to 12 ½ cents per acre for land on the market for thirty or more years.  For newly offered land or land subject to purchase for less than ten years, the minimum price of $1.25 remained in effect.  Although lands subject to graduation had been picked over and left unentered by settlers over these long periods, many tracts were fair to good and, like the swamp lands, only needed large amounts of capital to develop them.

At play was the increasing proportion of Government land being sold, which was acquired by speculators, reaching a high point in 1854 & 1855 and continuing largely until 1862 which was the enactment of the Homestead Act.

At the same time, there was a great division between the Northern and Southern members of Congress.  The South was very much against small land tract acquisitions.  In 1852, 1854 and 1859 the House of Representatives passed the Homestead Act only to have the Senate defeat it.  But in 1860, it passed Congress only to be vetoed by President James Buchanan.  At the same time, Congressman Justin Morrill of Vermont first introduced the Land Grant College Act in 1857 and was successful in getting it passed by Congress in 1859, only to have it vetoed by President Buchanan.  After the withdrawal of the Southern states from the Union and with a new President, both of these bills were passed by Congress.  President Abraham Lincoln signed the Homestead Act on May 20, 1862 and Morrill Act on July 2, 1862.

In all, G-Grandfather accumulated 320 acres in Waterford Township, 80 acres in Deep Creek Township, and 240 acres in Center Township, Clinton County, Iowa.  The latter he purchased in 1864 as 160 acres and 80 acres, which he joined together.  The price was $13.75/acre and $12.50/acre respectfully. He then sold this piece of land to two of his sons, Alex and John, in 1868.

My Grandfather’s younger brother, Robert, who assumed his father’s farm operation in Clinton County, purchased 80 acres adjoining his father’s original purchase for $37.50/acre on May 27, 1870.  This was an escalation of 2500% in the price of land from 1854 to 1870 (16 years).



In the summer of 1870, John, my grandfather, and his oldest brother, Donald, who later settled south of Walnut, rode across the state of Iowa looking for land.  The land in Greene and Carroll Counties appealed to them very much, but was out of first hands and was selling from $25 – $35/acre.

Here, in East Pottawattamie County, John found virgin prairie covered with giant bluestem that hid a horse if you dismounted.  On his purchase of 960 acres, minus the railroad, there was not a single tree. This presented a problem of not having material to fence.

The first Title entry was United States to George Keeline 6 April 1856.

Patents issued 10 March 1859, but not filed until 27 Dec 1867.

A land patent constitutes the first conveyance of land by the United States of America or the State in which it is located to a private owner or owners.  When the original owner of the land patent transferred ownership of the land thereafter it would be via a Deed.

On Grandfather’s original purchase, there were 8 military patents, which were never claimed.  There were 2 for 80 acres each, 4 for 120 acres each and 2 for 160 acres each.  The military service varied from 1 – Revolutionary War, 5 – War of 1812, 1 – Creek War and 1 – Black Hawk War of 1832.

The back of the patents read: Filed for record December 27, 1867 at 3 o’clock p.m.

Recorded in Book No 5 page 544 and entered for taxation.

CRI and P RR Company did not receive title to the Right of Way through Sections 11 and 14 of Layton Township until November 11, 1870.

The first train of the Chicago and Rock Island was operated on October 10, 1852 between Chicago and Joliet, Illinois.  Construction continued on through LaSalle and reached Rock Island on February 22, 1854, becoming the first railroad to connect Chicago with the Mississippi River.  In Iowa, the C & RI’s incorporators created (on February 5, 1853) the Mississippi and Missouri Railroad Company (M&M), to run from Davenport to Council Bluffs.  The Mississippi River Bridge between Rock Island and Davenport was completed on April 22, 1856.  The C & RI acquired the M&M on July 9, 1866 to form the Chicago, Rock Island and Pacific Railroad Company.

John Stuart received title by warranty deed on February 14, 1871.  The cost of the property was $7.00/acre.  The rate of interest on the mortgage was 10% with payments due 3, 4, 5 and 6 years from the date of origin.  [Information was taken from The Farmer’s Age Agriculture, 1815-1860 by Paul W. Gates, Armonk, New York: M. E. Sharpe, Inc., 1960.]  LS