ABUSE OF LAND LAWS

On the other hand, the land laws have sometimes been abused.  Large quantities of public land have fallen into the hands of speculators whose purpose is not to develop its resources, but to make a profit from the increased value of the land due to the efforts of others.  Immense areas of land have thus been withheld from production, or have been made to produce to a limited extent only, to the great loss of the nation.

RAILROAD LANDS

In the days of transcontinental railroad building, large tracts of land were given to the railroad companies by the government, with the expectation that they would dispose of it at reasonable prices to settlers attracted by the new transportation facilities, and would use the proceeds in railway development.  In fact, however, large quantities of this land have been held in an unproductive state for speculative purposes.

An illustration of this is the case of the Oregon and California Railroad land grant, made by Congress in 1869 and 1870, and comprising more than 4,200,000 acres, most of which bore a heavy growth of valuable timber.  “This railroad grant ... contained a special provision to the effect that the railroad company should sell the land it received to actual settlers only, in quantities not greater than one-quarter section to one purchaser and at a price not exceeding $2.50 an acre.  By this precaution it was intended that in aiding the construction of the railroad an immediate impetus should also be given to the settlement and development of the country through which the road was to be constructed.”

After selling some of the lands according to the terms of the agreement, the railroad company ceased to live up to these terms and sold large bodies of the land to lumber interests, thus putting a stop to the development of the region in the way intended by the government.  The government brought action against the railroad company, the outcome of which is that the government has bought back from the company at $2.50 an acre all of the lands of the grant which remained unsold, amounting to about 2,300,000 acres and valued at from $30,000,000 to $50,000,000.

These lands are being classified “in accordance with their chief value, either in power-site lands, timber lands, or agricultural lands,” and are to be disposed of accordingly.  The timber will be sold separately from the land, and the land will then be opened to homestead entry.

By this arrangement the railroad company gets for the land all that it was entitled to under the terms of the original grant.  In addition, provision is made for the payment to the counties in which the land lies of the taxes which the railroad company has not paid.  As the lands are sold, the proceeds are to be divided between the state and the United States, the state receiving 50 percent, 40 percent being paid into the general reclamation fund of the United States (see Chapter xiv, p. 213), and 10 per cent into the general funds of the United States Treasury.