Near the end of 1794, the Georgia legislature passed a law that sold most of its western lands to a few private companies. These lands were often called the Yazoo lands, since the Yazoo River flowed through some of them. These lands made up much of what is today Alabama and Mississippi. The law, which was finalized in 1795, led to charges of corruption and scandal. It generated lawsuits that lasted for decades, eventually resulting in a landmark Supreme Court decision.
Original Grants
Like most land disputes in North America, we find the origins of the problems coming from London’s Privy Council, which set Georgia’s boundaries when the colony first received its charter in 1732. It put no western border on the colony, other than perhaps the Pacific Ocean. The reason for this was that Britain hoped all of its colonies would push westward, claiming lands in the interior of North America, in order to challenge the claims of other European colonial powers.
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| Burning the Yazoo Land Act |
We’ve seen conflicting land claims like these lead to lawsuits, government petitions, and all out war to settle them. The Yazoo lands would be no different. Those who wanted to get rich by speculating on western lands were rarely afraid of the legal, or even physical battles that they would have to fight in order to claim the land as their own. Such risks often paid off when they could settle their claims and then sell the land at a huge profit to settlers.
One of the first big land deals attempted came right at the end of the Revolutionary War, when William Blount and John Sevier formed a company to settle the Muscle Shoals region along the Tennessee River, in what is today northern Alabama.
Sevier had moved to this region before the Revolution and had been actively fighting with the Cherokee for control of the territory. He led Overmountain Men at the battle of Kings Mountain. He would later go on to become governor of the purported state of Franklin.
Blount was a North Carolina official who hoped to get rich on western lands. He had served as a paymaster during the war, at least until he managed to lose $300,000 after the battle of Camden. After that, he served in both the North Carolina legislature, and the Continental Congress. Around the same time Blount and Sevier were trying to get western land rights from the Georgia Legislature, Blount was also pushing North Carolina’s Land Grab Act that attempted to open western lands to settlement.
As it turned out, the Georgia legislature would not go along at the time. But, of course, the land speculators would be back.
1788 Land Deal
In 1788, after Georgia ratified the Constitution, it tried to cede a large portion of its western lands to the federal government. The land offered, however, was too remote from any other settlements. It was in the middle of lands claimed by the Creek, Choctaw, and Chickasaw tribes. Part of the land was also still claimed by Spain. Congress refused to accept the land grant at that time.
Georgia was still relatively unpopulated with white settlers by this time. There were still vast swaths of land in the eastern part of the state that were completely undeveloped. Georgia law permitted the government to provide grants to new settlers who would develop the land. The goal was to populate the state. Laws required cultivation of the land for at least a year before title was given, and limits of no more than 1000 acres per individual. All of Georgia’s governors ignored these rules, giving away land grants to well-connected speculators and others who often obtained tens of thousands of acres, sometimes more than a million acres
Many of these land grants did not even cover actual land. Fraudulent surveys created fraudulent land claims. In 1796, the state’s twenty-four organized counties contained a total of 8.7 million acres. At the same time, those counties had land grants on file for over 29 million acres. Land dealers sold these grants to gullible buyers from northern states and from Europe, people who would never be able to find their claims if they ever came to the state.
Since it was out-of-state speculators who were being cheated, no one seemed to care much as the investment money flowed into the state and often greased the palms of government officials at all levels.
This was the environment that existed when Georgia tried to open up its western lands for sale in 1789. Three large investment companies agreed to purchase about 25 million acres of western lands. The companies included some really wealthy and powerful men. The head of the South Carolina Yazoo Company was Alexander Moultrie, who was also, at the time, the state’s Attorney General. Another major investor was Isaac Huger, who had been a Continental General and was currently serving as South Carolina’s federal marshal. The South Carolina Yazoo company purchased about 10 million acres, much of it along the Mississippi River, and included what is today Vicksburg. The total cost was about $67,000.
Another company, the Tennessee Yazoo Company was headed by Zachariah Cox, who had taken a position as assistant clerk of the Georgia House, giving him an influential position with the legislature. His company, backed by others, including William Blount and John Sevier, once again tried to purchase the Muscle Shoals area along the Tennessee border, nearly 4 million acres for about $47,000.
A third company, the Virginia Yazoo Company, included former Governor Patrick Henry. This company bought somewhere between 7 and 11 million acres for around $94,000. The exact size was vague because all of the land was still under the control of the Chickasaw nation and it was unclear how much could eventually be made available for settlement.
So, for only around $200,000, these three companies bought most of Georgia’s western lands. Almost immediately, the deals caused a public backlash. The land sale resulted in the land being sold for just over one cent per acre, a ridiculously small amount.
The new Federal government also raised concerns. Georgia was relying on questionable treaties that it had made with the tribes that controlled this land. Many tribal leaders denied that those who had signed these treaties had any authority to do so. President Washington, not wanting to see another major Indian war in the south, issued a proclamation in the summer of 1790, warning that only the federal government had authority to make treaties with the Indians, and that settlers who tried to move onto Indian lands not authorized by federal treaties were not under the government’s protection.
One group of settlers who moved into the Muscle Shoals area were forcibly removed by the Cherokee who still claimed ownership over this land. After the settlers’ removal, the Cherokee burned all the buildings so that they could not be reoccupied.
The Georgia politicians who approved this land deal quickly realized that, without public support, and without federal support, this whole thing was going to fall apart. If they could not convey the land, the companies might want their money back. One important principle of land deals at this time seemed to be “no refunds.”
The companies had been given two years to come up with the money. The terms of the sale had not specified how the payments would be made. The buyers expected to pay in depreciated state or Continental paper, which was probably worth an eighth of its nominal value.
Before that could make those payments, about six months after the deal was finalized, Georgia passed a law requiring that all payments be made in specie, that is gold or silver. There was no way the companies could come up with that much real money. When they offered payment with paper currency, the treasurer refused to accept it. When the payment deadline passed at the end of 1791, the treasurer stated that payment had not been provided. The state foreclosed on the grants, retook possession of the land, and kept any money that had already been paid.
One of the companies that lost its purchase money tried to bring a case before the US Supreme Court, but after ratification of the 11th Amendment, that case was dismissed.
James Gunn
Despite getting ripped off by the Georgia legislature, the speculators and investors retreated and regrouped to try again. Some new players also joined the competition.
In 1794, they made another attempt to buy up Georgia’s western lands. This time, the largest group was run by local Georgians. The Georgia Group was run by James Gunn, who was, at the time, one of the US Senators from Georgia. Gunn was a Virginian who had served as a Continental during the war. After the war, he settled in Savannah where he began a law practice and established a plantation.
Gunn was always on one financial hustle after another and also had a history of being quite combative. One example from the war, sheds some light on his character. During his military service in Georgia, his government-issued horse was killed in battle. By tradition, officers who lost a horse were allowed to pick another one from any that were available. Gunn managed to get a very valuable horse as his replacement. He then traded that horse with a local plantation owner for two other horses and a slave.
His commander at the time, General Nathanael Greene, felt that trading government property for other property was a violation of military rules. This resulted in an official inquiry into Gunn’s actions. The court martial acquitted Gunn of any criminal wrong-doing, but the Continental Congress condemned his actions. Gunn believed that Greene was responsible for this attack on his honor and challenged General Greene to a duel. Greene ended up declining the duel after discussing the matter with both General Anthony Wayne and General George Washington, who both argued that commanding officers should never fight a duel with subordinates over their official decisions. Gunn continued to consider Greene to be an enemy, and threatened to kill him. Even after the war ended, Greene carried a side arm to defend himself if Gunn tried to make good on his threats. The dispute only ended after Greene died of sunstroke.
Gunn also quickly made political enemies with James Jackson, who won a seat in the House of Representatives, as well as Anthony Wayne, who Gunn defeated in a competition for one of Georgia’s first Senate seats.
In the Senate, Gunn associated himself with the Federalists, and supported most of Hamilton’s policies. He also started the tradition of Senatorial courtesy, that is that one Senator can hold up any nomination to any federal appointment in his home state. Gunn objected to Washington‘s appointment of Benjamin Fishbourn for a position in the customs service for the port of Savannah. Fishbourn was a political ally of Anthony Wayne and had also taken Greene’s side in the wartime dispute over the horse trade. Gunn did not articulate any specific reason for his objection when Washington inquired. Washington moved on and nominated someone else.
Sale of Yazoo Lands
Gunn should have been in Philadelphia in late 1794 to attend a session of the US Senate. Instead, he stayed in Augusta to lobby for the land sale that his company wanted. He coordinated his efforts with three other companies that wanted to buy land. This included the Georgia Mississippi Company, the Tennessee Company, and the Upper Mississippi Company. Gunn coordinated with these other groups so that they would not create conflicting purchases of land and would not compete with one another on price.
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| Territory Sold under Yazoo Deal |
The speculators, not to get caught again, specified in the agreement that the purchase could be made with paper money, and would not be required to be paid in specie. Given that this paper could be purchased for about one-eight of the same value in specie, the buyers were actually getting this land for something closer to around $30,000 in gold or silver.
Now you may be asking, why would Georgia try to sell this land again for a pittance after there was so much public opposition to the last attempted sale?
One big reason was that the state was broke. Georgia had been spending money defending its frontier against the Creek Nation and didn’t want to raise taxes. There was also a clock ticking on the sale. If they sold the rights to the land before the US and Spain settled their conflicting claims and Spain retained control, then that would be the buyers’ problem. If the US acquired the disputed land, the Federal government might claim that land for itself and cut Georgia out of any land sales there. For the buyers, getting the disputed land now meant it was much cheaper thanks to the risk of the title. If the federal government succeeded in claiming the land, it would respect the private owners’ purchases.
Perhaps the biggest reason the legislature pushed through the bill was corruption. Senator Gunn simply paid bribes to a majority of the legislature.
With enough palms appropriately greased, the legislature approved the sale. However, no one considered paying off the governor. Matthews vetoed the sale. On December 29, 1794, Matthews’ veto statement said that the amount of money offered for the land was inadequate, that too little land was reserved for Georgia citizens to purchase, that putting all these western lands in the hands of a few companies would slow settlement of a state which was growing based on giving away land to new settlers, and because there was no public notice of the sale to accept rival offers that could increase the price of these sales.
Following the veto, the buyers and legislators scrambled to get the governor on board. The buyers agreed to double their price to $500,000. The legislature tied the bill to an act that would pay bounties for soldiers who had fought in the battles with the Creek Nation. So if the governor refused to let the deal go through, he would be subject to attack for not supporting the troops. A little over a week later, on January 7, 1795, Matthews signed the amended bill into law.
Scandal
Once again, the legislature had sold the bulk of the land to a few wealthy insiders for a pittance. Senator James Jackson, a political opponent of Senator Gunn, resigned his seat in the US Senate so that he could return to Georgia and devote himself to overturning this corrupt deal. He led a campaign to throw out of office every legislator who voted for the deal. The voters went along and cleaned house, electing reformers, including Senator Jackson, to the next Georgia State House. Gov. Matthews also lost his bid for reelection.
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| Senator James Jackson |
Some of those bribes came in the form of shares in the companies, which would be worth thousands of dollars once the land deal was completed. Other legislators demanded cash up front. Most demanded a standard payment of $1000. One state Rep. Thomas Rayburn settled for a mere $600. After the scandal broke, he was teased for selling out for so little. His reply was that it only showed he was not that greedy.
Others received slaves, or titles to eastern land in exchange for their votes. A few members who could not be persuaded to vote for the deal because they believed it would end their political careers if they voted for it, accepted pay-offs to leave town and miss the vote entirely.
The investigation also determined that there were other groups willing to buy the land for a much higher price. But since the legislators had taken bribes from the lower bidders, they ignored the higher offers and went with those who had already bought their votes.
The Rescinding Act
In light of this corruption, the reform legislature passed the Rescinding Act of 1796. This Act declared the sale null and void. It took back title to all the lands sold as being fraudulently obtained. It ordered all records related to the sale to be destroyed and instructed the law itself to be burned. It further made it a crime for any state official to record any land record related to this deal.
Two days after the act's passage, on February 15, 1796, the legislature gathered for the ritual burning of the law. As the governor and the legislature watched, the statute and all the records related to the sale were put in a plie. They used a magnifying glass to symbolize that the act was being consumed by "fire from heaven."
The Rescinding Act resulted in a much larger national debate. Alexander Hamilton, who was by this time a private attorney, drafted a legal opinion on behalf of New England investors who had benefitted from the Yazoo land deal He argued that the Rescinding Act was unconstitutional and legally void. Hamilton pointed out that the Constitution explicitly denied states the power to impair contracts. Voiding a completed contract exceeded the state’s legal authority. He argued that innocent third parties had already bought land from the companies. These innocent buyers had relied on a legally binding contract.
The dispute became another division between Federalists who agreed with Hamilton’s position, and the Democratic Republicans who argued that a contract based on corruption and bribery is inherently illegal and could not be enforced. The ongoing legal disputes would last for decades.
Next week, Tennessee becomes the 16th State to join the Union.
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Next Episode 394 Tennessee Joins the Union (coming soon)
Previous Episode 392 Treaty with Spain
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Further Reading
Websites
Lamplugh, George. "Yazoo Land Fraud." New Georgia Encyclopedia https://www.georgiaencyclopedia.org/articles/history-archaeology/yazoo-land-fraud
Jacobs, Frank “The Little-Known Land Fraud That Changed American History” https://www.atlasobscura.com/articles/strange-maps-yazoo-land-affair
Georgia’s Notorious Yazoo Land Fraud and Its Consequences, Part 1 https://georgelamplugh.com/2017/12/01/georgias-notorious-yazoo-land-fraud-and-its-consequences-part-1-in-pursuit-of-dead-georgians-27
Georgia’s Notorious Yazoo Land Fraud and Its Consequences, Part 2 https://georgelamplugh.com/2018/01/01/georgias-notorious-yazoo-land-fraud-and-its-consequences-part-2-in-pursuit-of-dead-georgians-27
Adams, Samuel B. “THE YAZOO FRAUD.” The Georgia Historical Quarterly, vol. 7, no. 2, 1923, pp. 155–65. JSTOR, http://www.jstor.org/stable/40575758
Elsmere, Jane. “The Notorious Yazoo Land Fraud Case.” The Georgia Historical Quarterly, vol. 51, no. 4, 1967, pp. 425–42. JSTOR, http://www.jstor.org/stable/40578730
Heath, William Estill. “THE YAZOO LAND FRAUD.” The Georgia Historical Quarterly, vol. 16, no. 4, 1932, pp. 274–91. JSTOR, http://www.jstor.org/stable/40576216
KENNEDY, BRENDEN. “‘Not Worth a Pinch of Snuff’: The 1789 Yazoo Land Sale and Sovereignty in the Old Southwest.” The Georgia Historical Quarterly, vol. 101, no. 3, 2017, pp. 198–232. JSTOR, http://www.jstor.org/stable/44651786
Lamplugh, George R. “John Wereat and Yazoo, 1794-1799.” The Georgia Historical Quarterly, vol. 72, no. 3, 1988, pp. 502–17. JSTOR, http://www.jstor.org/stable/40581861
Whitaker, Arthur P. “The South Carolina Yazoo Company.” The Mississippi Valley Historical Review, vol. 16, no. 3, 1929, pp. 383–94. JSTOR, http://www.jstor.org/stable/1895065
Younger, Richard D “The Yazoo Land Frauds” Marquette Univ. Masters Thesis, 1950. https://www.marquette.edu/library/theses/already_uploaded_to_IR/young_r_1950.pdf
The Origins of Senatorial Courtesy: https://www.senate.gov/artandhistory/senate-stories/origins-of-senatorial-courtesy.htm
Fletcher v. Peck https://www.oyez.org/cases/1789-1850/10us87
Free eBooks
(from archive.org unless noted)
Bishop, Abraham, Georgia Speculation Unveiled, Hartford: Elisha Babcock, 1797.
Bishop, Abraham, Georgia Speculation Unveiled, Second Part Hartford: Hudson & Goodwin, 1798.
Haskins, Charles H. The Yazoo land Companies, New York, Knickerbocker Press, 1891.
Hunting, Warren B. The Obligation of Contracts Clause of the United States Constitution. Baltimore: Johns Hopkins University Press, 1919.
Books Worth Buying
(links to Amazon.com unless otherwise noted)*
Cadle, Farris W. Georgia Land Surveying History and Law, Univ. of Georgia Press, 1991.
Hobson, Charles F. The Great Yazoo Lands Sale: The Case of Fletcher v. Peck, Univ. Press of Kansas, 2016.
Lamplugh, George In Pursuit of Dead Georgians: One Historian's Excursions Into The History Of His Adopted State, iUniverse, 2015.
Magrath, C. Peter. Yazoo: Law and Politics in the New Republic. The Case of 'Fletcher v. Peck' Brown Univ. Press, 1966.
Teachout, Zephyr Corruption in America: From Benjamin Franklin's Snuff Box to Citizens United, Harvard Univ. Press, 2014 (chapter on Yazoo available online at JSTOR)
* As an Amazon Associate I earn from qualifying purchases.
