Cyclopædia of Political Science, Political Economy, and the Political History of the United States

Edited by: Lalor, John J.
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New York: Maynard, Merrill, and Co.
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Includes articles by Frédéric Bastiat, Gustave de Molinari, Henry George, J. B. Say, Francis A. Walker, and more.
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YAZOO FRAUDS (IN U. S. HISTORY), the name commonly given to a land act passed by the Georgia legislature in 1795, and to certain claims arising under it, which were not settled until 1814.


—Georgia began her existence as a state with doubtful claims to the territory west of her present area. (See TERRITORIES.) The Indian title had been extinguished in but a part of the state, bounded east by the Savannah river up to a considerable distance above Augusta, and west by the Altamaha and Oconee. The rest of the state belonged to the Indians, principally Cherokees and Creeks, but over all of it the state claimed sovereignty and jurisdiction, and the exclusive right to pre-empt lands from the Indians. (See CHEROKEE CASE.) When, therefore, the state sold lands, the sale was really of the right of pre-emption. In this manner a bargain was made in 1789 to transfer about 15,000,000 acres to three land companies for about $200,000; but the companies insisted on paying for the lands in depreciated Georgia paper, whereupon the legislature declared the bargain at an end.


—This abortive sale furnished a precedent for the increasing land speculations which grew to be a mania during the twenty years, 1780-1800. During the first fifteen years of this mania it had almost exhausted the sale of whatever lands the states had not covered by military land warrants. Georgia's vague and doubtful territorial claims seem to have at last attracted attention as a promising field for speculation. Four land companies were formed, the Georgia company, the Georgia Mississippi company, the Upper Mississippi company and the Tennessee company, commonly called, in general, the Yazoo companies, from the general field of their operations, in the Yazoo district. These joined forces in an attack upon the Georgia legislature, and obtained from it the passage of the act of Jan. 7, 1795, the most extraordinary piece of state legislation in our history. It purported to transfer to the companies named, for a consideration of $500,000, a tract of land then estimated at 20,000,000, but afterward found to contain 35,000,000, acres. The price, about one and two-thirds cents per acre, for the richest farm land in the country, was certainly suspicions, but the act itself kindly furnished to the companies the means of corrupting the legislature: one clause contained a provision allowing the companies to take up, on the same terms, 2,000,000 acres additional, for the benefit of whatever "citizens of Georgia" they should admit as their partners. And so little care was taken by the participants to cover their tracks that the United States commissioners in 1802-3 had only to compare the schedule of partners acknowledged by the companies with the legislature's yea and nay votes to show that every member of both senate and house who voted for the act of 1795 had been bribed by a share of the 2,000,000 acres, with a single exception, Robert Watkins, whose name deserves to be recorded. The bribery was effected in the manner now familiar, by assigning a number of acres to the legislator, excusing him from payment until the market price had risen to forty or fifty times the stipulated price, and then paying him the difference.


—The publication of the act aroused an instant storm of indignation throughout the state. In every county but two the grand juries presented the act as unconstitutional and void; and when the state convention met in May, 1795, it was deluged with petitions, memorials and remonstrances against the land act. These it transferred to the attention of the next winter's legislature, so that the election of that body turned on the Yazoo question. When it met, the members who had voted for the act had disappeared from state politics; Jackson, the United States senator, had resigned his seat and entered the state legislature to lead the anti-Yazoo majority; and an act was passed, Feb. 13, 1796, revoking the sale as a violation of the state constitution, illegal and void, and directing the repayment of purchase money to all purchasers who should apply for it within eight months. The act of 1795 was then publicly burned in front of the state house, the two houses attending in a body: the committee handed the act to the president of the senate, he to the speaker of the house, he to the clerk, and he to the doorkeeper, who threw it into the fire. All evidence of its passage was expunged from the records; and the constitution of 1798, while forever prohibiting sales of lands to individuals or companies before counties were fixed, ordered the land companies' purchase money to be kept in the state treasury at the companies' risk, and subject to their order of withdrawal.


—One would imagine that all these proceedings were a sufficient evidence of a cloud upon the companies' title to make intending purchasers exceedingly cautious. They seem to have had no great difficulty, however, in disposing of their lands at a sufficient advance to give them a handsome profit; and, as the third parties continued to sell, an army of claimants was gradually formed, particularly in New England and the middle states. When Georgia, in 1802, ceded her western claims to the United States, clauses in the compact confirmed Georgia's previous grants, and provided that not more than 5,000,000 acres should be appropriated for the satisfaction of "other claims," if congress should act upon them within a year. The commissioners, Madison, Gallatin and Lincoln, who had negotiated the compact with Georgia, reported, Feb. 16, 1803, that the present Yazoo claimants were innocent third parties, holders without notice, and their claims ought to be compromised; that they offered to accept twenty-five cents an acre, or a lump sum of $8,000,000; but that a sum of $2,500,000 with interest, or $5,000,000 without interest, payable out of the proceeds of Mississippi land sales, would be a fair compromise. The Yazoo claims now met the fiercest and most uncompromising opponent in the person of John Randolph. (See his name.) He had been in Georgia on a visit in 1795-6, and now took up the battle against the claimants with a rancorous sense of personal hostility which added to his naturally angry support of Georgia's action as a sovereign state. Nevertheless an act was passed, March 3, 1803, one of whose clauses, after setting aside a part of the 5,000,000 acres for British claimants and squatters without title, appropriated the remainder to the satisfaction of such other claims, arising under "any act or pretended act of the state of Georgia," as should be filed in the office of the secretary of state before Jan. 1, 1804, and subsequently approved by congress.


—Among the claimants was the New England Mississippi company, successor by purchase to the Georgia company. Randolph's opposition has usually been attributed to a general hatred of New England, but its real basis seems to have lain in an honest belief that the New England company was an organized attempt to obtain $8,000,000 from congress by the same process of corruption and bribery which had originally been successful with the Georgia company. The company's principal agents were Granger, then postmaster general, and Perez Morton, a leading democratic politician of Massachusetts. Their chances in congress seemed to be fair, when Randolph anticipated them by offering a series of resolutions, Feb. 20, 1804, upholding the Georgia revoking act of 1796, and directing that no part of the 5,000,000 acres be appropriated to any claimants under the act of 1795. The second resolution contains the gist of Georgia's defense of her action, as follows: "That, when the governors of any people shall have betrayed the confidence reposed in them, and shall have exercised that authority, with which they have been clothed for the general welfare, to promote their own private ends under the basest motives and to the public detriment, it is the inalienable right of a people so circumstanced to revoke the authority thus abused, to resume the rights thus attempted to be bartered, and to abrogate the act thus endeavoring to betray them." His resolutions were postponed in March by a general majority of about 53 to 50; but his object had been obtained, for the claims were practically postponed with the resolutions. But Randolph always believed that his own fall from the leadership of his party in congress was directly attributable to the disappointment of members of congress interested in the claims, and backed by a strong and unscrupulous lobby. He was not alone in the belief: the evident conviction that bribery had been at work in congress makes the debates of the time quite unpleasant reading.


—In January, 1805, the claims again came up for consideration, and Randolph, freed from any partial checks by his evident banishment from his party, gave loose reins to the powers of vituperation, in which he was unsurpassable. Every one who favored the claims in any way came in for a share, but most particularly the principal agent, Granger. Randolph, in a speech of Jan. 31, 1805, even accused him, without offering any direct evidence, of having prostituted his official power of making postoffice contracts to the purchase of members' votes for his constituents, the New England company. One sentence will give some idea of Randolph's peculiar style: "You must know, sir, that the person so often alluded to maintains a jackal, fed not upon the offals of contract, but with the fairest pieces in the shambles; and at night, when honest men are in bed, does this obscene animal prowl through the streets of this vast and desolate city, seeking whom he may tamper with." Granger, the next day, wrote a naturally indignant letter to the speaker, demanding an investigation, which was not accorded to him, Randolph's object had been sufficiently attained, and he followed the same tactics for the future, making it so unpleasant for any one who introduced a bill to satisfy the claimants that no act was passed. Even in 1808, when the short-lived democratic legislature of Massachusetts unanimously asked congress to act upon the claims, no attention was paid to the request.


—Failing before congress, the claimants arranged a conflict of title between holders of Yazoo lands under their grant and under the United States, and thus got the matter before the supreme court in the case of Fletcher vs. Peck. The decision was given in 1810, and fully sustained the claimants. It held that the law of 1795 was a contract between the state and the claimants; that the states were forbidden by the constitution of the United States (art. I., section 10) to pass any law impairing the obligation of contracts; and that the revoking act of 1796 was therefore unconstitutional and void. Still the matter languished until March 31, 1814, when an act was passed appropriating $8,000,000 in scrip, payable out of the proceeds of Mississippi lands, to satisfy the Yazoo claimants. Comparatively little of this, however, went to the claimants. Most of them had become discouraged by the long delay, and had sold their claims to speculators at a heavy discount. Some few subsequent acts were found necessary to complete minor details, but the end of the case was fairly reached in 1814.


—It is certainly true that the states were forbidden by the constitution to pass any law impairing the obligation of contracts; but it is equally true and clear that the contracts then intended were mere private contracts between individuals, and not those which are public in their nature and trench on the prerogatives of the state government. It is usually considered that the change of course was first made by the supreme court in the case of Dartmouth College vs. Woodward in 1819, though that case was only that of a private eleemosynary corporation, and the rule in its case has since been transferred to the maintenance, as irrepealable contracts, of the charters of corporations essentially public in their nature. A more apt illustration of this subsequent line of decision may be found in this Yazoo case in 1810. The contract was one which deprived the state of its public lands, which was obtained by a wholesale corruption of legislative agents never effectually denied, and which was protested against by one of the principals, the people of the state, the instant their voice could be heard, as not their act and deed, Surely it would seem that here there was no contract at all; or that, if there was a contract, it came with the implied condition of the state's power to revoke or alter it. Whether we take the standpoint of state sovereignty (see that title) or national sovereignty, it is clear in either case that the state legislatures in 1775 were left, either by the will of the people of the state or of the people of the nation, the same supreme power of revocation or alteration of their public charters or public contracts which has always been possessed by the British parliament. He who asserts that they have since lost that power may fairly be asked to put his finger on the place where the decree of the state or of the nation has taken it from them. It is hard to side with John Randolph against John Marshall, but it is infinitely harder to see any such sweeping decree in the contract provision of the constitution. We can only see a series of stepping stones, beginning with the Yazoo decision, and ending with a general judicial decree that the state legislatures have no power to revoke or alter charters. So that, as the law stands, any corporation has only to be unscrupulous enough to purchase our legislature, and to obtain from that body an irrepealable charter granting it any privileges, however enormous or however opposed to the self-government of the people of the state, and it obtains at once a vested right which must be sustained by the judicial power and physical force of the United States. In this aspect, the case has a far more dangerous appearance now than in 1810 or 1819, owing to the rise of a class of corporations whose powers, ambitious and perilous rivalries could hardly have then been imagined. It may be dangerous in some degree to expose our corporations to the meddlesomeness of state legislatures; but it can hardly be denied that it is still more dangerous to hang the safety of popular government by states upon the small chance of the unanimous and perpetual scrupulousness of an infinite number and variety of corporations. When the danger shall appear in practice for the first time it will be too late to avoid it, for the court in the Yazoo case very naturally decided, as it must always decide, that it could not examine or even recognize any allegation of corruption in the supreme legislative authority of a state: it must take the legislature's action as the voice of the state. Judge Jameson, in the pamphlet cited below, speaks as follows: "It may be heresy, but, if so, the heretics are a large and increasing company who maintain that the decision in Dartmouth college vs. Woodward has been carried much too far, and been made to sustain grants which neither law nor justice nor sound political principle can sanction. * * But in some of the very cases in which our courts have sustained that species of contracts, upon the supposed controlling authority of the Dartmouth college case, may be found the law which is ultimately to rescue us from the bondage that case has brought upon us. In many of these cases there are dissenting opinions, giving, in the judgment of many, the better law in regard to the proper application of the principles of the Dartmouth college case. By going back, therefore, to the path which was abandoned when the rule in that case, that of a private eleemosynary corporation, was perverted to the maintenance of corporate institutions invested with great public functions, not only congress but the states will be left free to bring the needful legislation to bear against those monster establishments deeming themselves impregnable behind the barrier of the constitution."


—See authorities under GEORGIA; 4-6 Hildreth's United States (index); 2 Schouler's United States, 74; 2 Tucker's United States, 186; 1 Garland's Life of Randolph, 66; Adams' Life of Randolph, 109; 3 Benton's Debates of Congress, 142 (Randolph's resolutions), 333 (Granger's letter and defense); 2 Stat. at Large, 235, and 3 : 116 (acts of March 3, 1803, and March 31, 1814); 1 Stat. at Large, Bioren & Duane's ed., 460,512 (evidence collected and published by Georgia); Fletcher vs. Peck, 6 Cranch's Reports, 87, or 2 Peters' Reports, 328; Jameson's Grounds and Limits of Rightful Interference by Law with the accumulation and use of Capital, and authorities cited.


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