Looking at maps showing Federal lands of the West, you quickly notice a checkerboard arrangement incongruously drawn without seeming reason.  Certainly, no topographical purpose.  You now see the result of the rail land grants – grabs – of the 19^th century.

One of Abraham Lincoln’s main planks to his 1860 presidential campaign became realized by the 1862 Pacific Railway Act.  This gave Congress the ability to grant land and low-cost loans to railway companies building lines across the West.  Lincoln’s goal was a transcontinental line to unite California and the Pacific Coast to the rest of the country.

RAILS TO OREGON

Congress improved upon the railway act in 1866, giving 3.7 million acres in rail land grants to someone willing to build a connecting line from Portland to the California border.  The builder of the railroad chosen by the Oregon Legislature was Benjamin Holladay’s Oregon and California Railroad Company.  Holladay was to build the line to federal railroad specifications.  Land grants gained by the company could only sell to “actual settlers” in 160-acre lots for no more than $2.50 per acre.

oREGON & cALIFORNIA

While the O&C built southwards from Portland, the company received alternating sections of land on both side of the rail line spanning 20-30 miles.  A checkerboard of lands developed 40 to 60 miles wide giving federal rail land grants to the O&C with the above stipulations for resale.  A lot of the lands outside of the Willamette Valley gained comprised of timberlands on rugged terrain not attractive for farming.  The timberlands did attract the interest of lumber investors with the land quickly worth more than $2.50 an acre because of the trees.

The O&C finally reached the California border in 1887 at the Siskiyou Summit after beginning construction in Portland in 1869.  In the meantime, O&C became part of the Southern Pacific Railroad system – though not officially purchased until 1927.  The O&C did foster growth along the line as it developed.  Towns in the Willamette Valley like Canby, Aurora and Harrisburg while further south in the Umpqua Valley, Drain, Oakland and Yoncalla grew up.

ENTER EDWARD HARRIMAN

As the 19^th century began to close, enter one Edward H. Harriman.  Harriman joined the Union Pacific Railroad as a director in 1897 restoring the bankrupt line to financial health.  A year later, he became the chairman of the executive committee ruling the UP system until his 1909 death.  From 1901 until his death, he served as president of the Southern Pacific Railroad – from 1903, he added the title of Union Pacific president, as well.  In addition, he gained control of the Central Pacific along with the UP, SP and other rail interests around the country.   In 1913, UP was forced by the Supreme Court to sell off its holdings in the SP.  He hoped to officially merge the UP and SP together, but the federal government denied that option until 1996, long after Harriman’s time. 

The O&C was run by the SP in 1900 which meant Edward Harriman.  Knowing the timberlands were worth more than $2.50 an acre, the O&C began to sell lands in excess of 160 acres – the amount “actual settlers” could purchase – and the selling price was a bit higher than the allowed $2.50.  From 1894 until 1903, granted lands were sold to people posing as “actual settlers at prices far in excess of the allowed fee.  The so-called “actual settlers” – people whom a colleague of Harriman’s found in the bars of Portland – then sold their lands to the real buyers.  Several times, 1,000 to 20,000 acres sold for prices ranging from $5 to $40 per acre.  In one case, 45,000 acres sold for $7 per acre.

OREGON LAND FRAUD

Binger Herman had come out with his family in 1859 settling in the Coquille Valley, today’s community of Broadbent.  Hermann served in the Oregon legislature as a representative and then senator from 1866 until 1870.  In 1884, he was elected to the US Congress where he served until 1896.  Then, appointed by President William McKinley, Hermann served as Commissioner of the General Land Office.  He returned to Congress in a special election to replace a death in 1903, winning a new term a year later.

As Commissioner, Herman ran afoul of the Secretary of the Interior Ethan A. Hitchcock, who served under both McKinley and Theodore Roosevelt.  Land fraud information had earlier come forward from Oregon to the GLO where Hermann ignored it.  He also might have removed or lost files pertinent to the case.  The scandal became known as the Oregon land fraud scandal which came to involve almost everyone in the Oregon congressional delegation, most notable Senator John H. Mitchell.  Mitchell became one of twelve US Senators indicted while in office and one of five convicted.  Hermann got off in his trials from hung juries.

Harriman hired former surveyor Stephen A. Douglas Puter to round up the men in the saloons of Portland for the illegal purchases. 

Local politicians helped to grease the wheel.  Puter was also responsible for getting the politicians on board with the timber land sales.

greasing the pig

Puter was indicted in 1905 including with the bribing of Senator Mitchell to the tune of $2,000.  Before sentencing, Puter and his partner, Horace G. McKinley took off.  McKinley made it to China.  Puter survived an armed confrontation in Boston but was captured a few months later getting to spend two years in Multnomah County jail.  Using his time in prison, Puter wrote the tell-all Looters of the Public Domain.  Confessing and accusing, he wrote “Thousands upon thousands of acres, which included the very cream of timber claims in Oregon and Washington, were secured by Eastern lumberman and capitalist, … and nearly all of the claims, to my certain knowledge, were fraudulently obtained.”

political fall out

Pardoned after 18 months by President Theodore Roosevelt to turn State’s evidence, he kept much of the money he received from the timber fraud.  His testimony led to indictments of Senator Mitchell, and Congressmen Hermann and John N. Williamson plus others.  Mitchell was sentenced to six months in prison, but still out awaiting an appeal, he died from complications related to a tooth extraction.  Williamson was able to have his verdict overturned by the Supreme Court in 1908 because of jury tampering and witness intimidation.  Contemporary opinion was not entirely against Mitchell.  One former governor, T. T. Greer noted “he was more sinned against than sinning” a product of a fanatical prosecutor, Francis J. Heney, motivated by partisan politics.

RAIL LAND GRANT SALES

In total, 5,306 sales from the rail land grants rang totaling 830,000 acres.  4,930 of the sales met the requirement of not exceeding 160 acres.  376 sales exceeded the 160-acre limit totaling 524,000 acres for more than $2.50 per acre.  After 1897, 478,000 acres along with 370,000 of the previous 524,000 acres of the rail land grants were sold to only 38 purchasers exceeding 2,000 acres per purchase.  O&C decided to withdraw remaining lands from sale stating the lands unsuitable for settlement with only timber of any value on the lands.

Refusal to sell generated strong opposition from local governments and the public at large.  This led the Oregon Legislature and later the Us Congress to begin proceedings to force the now-Southern Pacific to resume land sales or risk forfeiture.  Years of court actions followed before the lands were decreed forfeit by a District Court in 1911.  SP ceased paying property taxes in 1913 as the case made its way to the Supreme Court.

COMPLICATIONS

Here, the Supreme Court agreed the rail land grants terms violated, but since the rail line did get built, complete forfeiture of remaining lands not appropriate.  Congress next became invited to come up with a remedy resulting in the Chamberlain-Ferris Act 9 June 1916 stating all remaining grant lands to be revested to the federal government.    Compensation to SP was for $2.50 per acre.

By taking formerly private lands back to the government meant taking away both an economic and tax base for locals.  In response, the Oregon and California Land-Grant fund was established.  After the federal government was compensated for paying off the SP, income from timber and land sales was split 25% to local counties, 25% to Oregon and the remainder kept by the federal government.

Chamberlain-Ferris was only a first step in federal-local interactions concerning the lands.  From 1916 until 1937, federal policy was to cut timber and then sell off the land to private owners as quickly as possible.  There was no policy regarding conservation or the replanting of cut-over lands.  In 1937, Congress reversed itself, retaining the lands and requiring sustainable yield management implemented on the remaining timberlands.  In response to fall in local property available to be taxed, the amounts issued to local counties saw an increase.

THE CHECKERBOARD

The O&C lands – most administered by the Bureau of Land Management, 2 million acres, though the Forest Service administers some 500,000 acres – were affected like most other forest lands in 1990 by the listing of the Northern Spotted Owl on the Endangered Species Act.  This led to significant reductions in logging through the Northwest.  The reduction in logging went through many stages and many court cases with many more years of litigation ahead before a resolution finalizes.

Management of the lands is difficult, scattered about private lands due to the checkerboard pattern.  Federal regulations and management plans do not apply to the private lands.

WASHINGTON STATE – NORTHERN PACIFIC

In Washington, the main recipient of rail land grants was the North Pacific Railway.  Given a land grant by Congress in 1866, the NP moved to building a third transcontinental rail line at a slower rate than the Central Pacific-Union Pacific and Southern Pacific ventures.  The NP was always land rich and cash poor.  Generous rail land grants gave the company a large amount of timberland throughout western Washington.  Most of the freight cars of the NP returned empty after bringing goods out to the Northwest from the east.  A solution was to fill those cars with lumber.  The company built a sawmill in Tacoma which proved to be successful, especially since Midwestern lands were becoming depleted of salable timber.

St. Paul & Tacoma Lumber Company

In early 1888, a group of timber barons from Minnesota got together – the St. Paul & Tacoma Lumber Company – massing together $1.5 million in funds.  They then made a deal with the NP to buy 80,000 acres on the shoulder of Mt Rainier.  The deal was a win-win for both sides.  The barons needed logs while the NPO needed revenue from both lands sold – $3 per acre – and freight for logs and lumber.

Eventually, the NP went bankrupt for a second time during the financial crises of the 1890’s.  With the help from the lumber company, the NP reorganized in 1898 consolidating two additional rail lines into their system.  First was the Tacoma, Orting and Southeastern which NP helped create to bring lumber in from Mt Rainier.  The second line was the Columbia and Puget Sound giving NP access into Seattle.  They also agree to share tracks with the new arrival Great Northern Railway.  The NP now wobbled directly into the orbit of the Great Northern and its president James J. Hill – after a stock-purchase battle with Harriman almost bringing down the New York Stock Exchange.

ASIDE

A quick aside.  In 1909, the Chicago, Milwaukee, St. Paul and Pacific Railway – Milwaukee Road – built tracks across the Cascades at Snoqualmie Pass.  In response, NP agreed to share its mainline between Portland and Tacoma to deny the Milwaukee Road from similar moves in 1909.

St. Paul & Tacoma continued to enlarge and bring out logs from the Cascades.  They eventually merged with St. Regis in 1958 to become the St. Regis Paper Company.  The merger was an attempt to keep up with another Minnesota timber conglomerate even more successful, one headed by Frederick Weyerhaeuser.

A NEW TIMBER KING COMES WEST ON THE GREAT NORTHERN

At the beginning of 1900, James J. Hill sold off 900,000 -1,406 square miles – of Washington state timberland to Weyerhaeuser for $5,400,000 in one of the largest single land transfers in American history.  The newly formed Weyerhaeuser Timber Company eclipsed the St. Paul & Tacoma by a vast amount.

James Hill and Weyerhaeuser were friends and neighbors back in St. Paul, Minnesota.  Hill acquired controlling interest in the NP, a company still with vast lands in its accounts from the federal land grants.  Hill’s Great Northern, on the other hand, became the first transcontinental line completed without the aid of federal lands.  But, by gaining control of NP, Hill gained control of the lands – 44,000,000 acres or 68,750 square miles.  Weyerhaeuser needed trees, the Midwest depleting quickly, while Hill needed cash.  Weyerhaeuser offered $5 an acre, Hill countered with $7, and they settle for $6.

THE DEAL

The settlement was for a $3,000,000 down payment and eight semi-annual payments of $300,000 plus interest.  Financially strained by the deal, Weyerhaeuser needed to bring in many of the other logging interests in the upper Midwest.  No one knew how much timber actually was on the lands, but it was determined in 1912, he only paid 10 cents per 1,000 board feet.

Weyerhaeuser Timber Company continued purchasing timber land increasing their holding to 1,500,000 acres by 1903.  The company sold timber to sawmills using profits to buy more timberland until 1915.  After that date, the company expanded into all aspects of the industry.