Address, “Land Frauds”
Chairman Wallace—We are now ready to hear the report of the Committee on Lands and Agriculture. The first speaker will be Dr. George E. Condra, of Lincoln, Neb., whose subject is “Land Frauds, or Get-Rich-Quick Schemes.”
Dr. Condra—Mr. President and Delegates: Some of you may recall the fact that the speaker has briefly outlined this subject at each of the preceding Congresses, under the head, “Conservation of Business.” The discussion offered at this time is based on reliable information secured from many States. It is largely the result of field work. The data are presented according to the viewpoint of Conservation and should be so considered.
Do you fully realize that the principles of Conservation are permeating every department of human industry, improving the processes, increasing efficiency, and promoting common honesty, that the idea of equity is increasing in force? That it is being extended to business not for the purpose of holding it in check, but primarily for protection against fraud? This movement for square dealing certainly is in order for business is sore with graft and tracked by fraud at every turn. Plain it is that many transactions in the realm of commerce fall outside the sphere of true business. They grade from those that are doubtful on through to those that are plainly fraudulent and therefore criminal. The term “business,” however, has a splendid meaning which should be conserved. It symbolizes honesty, stability, honor and reliability. Sharp practice, double dealing and doubtful promotion are but parasites and should be so regarded. They have no legitimate place in business and are being eliminated.
Several persons have spoken in this Congress on pure food, eugenics, etc. Their messages will tend to make people healthier and better fit to be fathers and mothers. All this is good. Dr. Wiley and others have emphasized the importance of pure food and health laws, but how many go back of this matter of health and food to the land, or source of our food and raiment and show the great need for pure land laws? (Applause.) The State trains its sanitary engineers, lawyers and physicians for their life work. It examines the lawyers and doctors before permitting them to practice, but how about land agents? They are good and bad. Many of them have no special qualifications for their work and should not be permitted to do about as they please without restriction, promoting this and that deal which may or may not have merit. Grant me your closest attention and I will point out certain classes of fraud that operate in connection with the development of mineral lands, irrigation, fruit lands, eucalyptus culture, drainage, dry land farming and the small tract propositions.
Promotion of Mineral Land.—The amount of money sent from the country and town and city to doubtful mine promoters is enormous. The return for this outlay is small, in some places less than one cent for each dollar. Yet the public does not fully realize that nearly all reasonably sure propositions are not available for wanton promotion, that a mere prospect is not a mine, and that fraudulent promoters are hurting the mining business.[3]
Oil and Gas Promotion.—The excitement caused by a developing oil field is intense. Agriculture gives way to a spirit of speculation and overvaluation and everything looks good to an investing public. Fabulous returns appear to be in sight for all who invest in time. This gives opportunity for professional promoters to do their work, sometimes on a large scale. They claim a sure thing even when wildcatting. So they send unwarranted prospectuses broadcast and the money harvest is on. It is difficult to place the criminality of such procedure. We only know that it works out badly as a rule. You should know that it is bad business to accept the unqualified statements of most oil and gas promotion concerns as a basis for investment. These persons and concerns interfere with legitimate development and should be brought under control.
Irrigation Schemes.—The Federal Government spends vast sums in developing the irrigation resources of several dry land States. Such reclamation is of economic importance. Furthermore, many reliable individuals and private companies do as well and even better in developing some projects. As a result of successful irrigation thousands of happy homes are made where once was only dry land. Notwithstanding this fact there are fraudulent irrigation promoters. Scheming individuals sell illegitimate propositions which can not succeed because of lack of water, unsuitable land or heavy graft. Such promotion has gone on to such an extent as to call for severe criticism by many practical irrigationists of the West, and the Reclamation Department of the Federal Government is increasing its diligence in checkmating the work of persons who attempt to promote bad projects.
Fruit Land Promotion.—Have you visited the great fruit districts of Oregon, Washington and other Northwestern States? Do you know what care is there given to the cultivation and marketing of apples especially? The fruit is so perfect in form and color. It is accurately graded for the Eastern and foreign markets. These splendid successes are widely known and are taken advantage of by scheming persons who promote the sale of any and all kinds of land in and near fruit districts. One of the leading fruit men of Washington says that thousands and thousands of dollars are going into the hands of concerns that are sure to fail and that the fruit business is being hurt by such operations. The trouble of it is that the average investor does not know that the fruit business is highly specialized, and that many matters concerning soil, exposure, climate, markets, etc., not known to him, are the features that determine success and failure. Furthermore, the fraudulent promoter does not know, neither does he care.
Doubtful promotion of this kind is not confined to the Northwest alone. It has hurt the South and may do damage to New York and other States in which are lands well suited for fruit raising, if the proper authorities do not conserve the larger interests of the industry and State against promoters.
Eucalyptus Promotion.—For many years the forests of the United States have been in process of depletion. Some have seen in this, and with good reason, an approaching timber famine. The alarm has been sounded, and the demand has gone forth for better methods in timber utilization, for fire protection, and tree planting. This is the right thing without doubt, but it affords a loop-hole for promoters. It is understood, also, that some trees grow faster and are more all-purpose than others. The eucalyptus are of this kind. They are of many kinds. Such trees can not be grown on any and every type of soil and are limited somewhat by climate. It so happens that California, because of its soil and climate, is the leading State in culture of eucalyptus. It has several successful groves and larger plantings, yet the situation is promoted for all it is worth, and perhaps more. The public (in the Central and Western States) is worked by carefully-planned selling schemes. The fact is that there is too much graft in some of them. The process has gone on to such an extent as to cause the friends of eucalyptus planting to sound a warning against such procedure. This should cause investors to make a more careful inquiry of reliable persons, not controlled by the promoters, before parting with money. The trees must have suitable soil, climate, and care.
Drainage Schemes.—One of the largest lines of development in the United States is in the field of drainage, whereby swamp and flood lands are improved. The amount of land that either has or can be reclaimed by drainage is said to be about 75,000,000 acres. The Federal Government, various States, companies, and individuals, are doing this work. Much of such development is well founded, yet there are bad deals, which might be called deliberate steals in some cases. Examples of these exist in a few States and much money has been squandered on projects that can never succeed. Teachers, ministers, farmers, merchants and others are victimized. In the language of one of Florida’s representatives at the National Irrigation Congress of this year, “Persons selling certain wet lands of Florida are practicing fraud and should be prosecuted as criminals. They are hurting the good name of Florida and swindling people in the North.” This person severely criticized certain cities of the North as being promotion centers. Further comment is not necessary.
Dry Land Deals.—Much dry land promotion is fraudulent, caused in part by misinformation on the part of agents, but due to some extent to deliberate misrepresentation. For instance, there are places in Texas, Oklahoma, Kansas, Colorado, western Nebraska, Wyoming, and other States subject to such promotion. The fact is that a part of the land in the dry area of each State named is well suited for dry farming, but that unscrupulous agents sell anything and everything to unsuspecting persons as being good, awaiting the plow and successful development. So it is that geographic position has been overworked. The following points are sometimes overdrawn in securing sales:
a. The idea that nearly all agricultural land is under cultivation.
b. The notion that dry farming methods are successful on almost any kind of dry land.
c. That the climate, referring to the rainfall especially, is becoming more favorable for agriculture in dry regions as the years go by. This notion, used in deceiving thousands of people, is greatly in error.
d. Advantage is taken of such fluctuations in rainfall as occur from year to year and at more or less regular periods, ten to twelve years apart. During the wet years the country is boomed; at dry times the people move out and industry wanes. These ups and downs are recurring features on certain areas not permanently suited for farming. The process works havoc with the misguided settlers, hurts a State that encourages it, and brings no lasting beneficial results to land men who manage the operation.
Apparently, Nature is no respecter of persons, especially so on the dry, sandy lands. It is coming to be known that there is no permanent change for the better in rainfall, frost belts or any thing of the kind. Some lands are better suited for grazing than for ordinary farming and should be so managed.
The speaker is pleased to be the servant of a State that stands strongly against misrepresentation of land values. Such a policy works out the greatest good in the long run. It breeds a healthy demand for a fact basis of development and minimizes the tendency to “stand up” for the home State by unwarranted “boostings.”
Land Schemes in General.—There are many other land projects. The public has invested largely in small tract propositions in Florida, Texas, and other States. Much of this promoted land has considerable value, but some of it is over-estimated, and many investors are quite apt therefore to lose all or nearly all of their money. Certain kinds of land look more inviting during one season of the year than at another. For example, there are places in Texas and Mexico to which the promoters take their victims in the dry season and to other lands during the wet season. This year the speaker heard a Texas representative declare, in a national meeting, that many of the small tract propositions, together with certain other land schemes of his State, are filled with fraud. He criticized northern people for promoting Texas. This should serve at least as a warning to unthoughtful investors. The good agricultural propositions of Texas and elsewhere are handled by responsible land agents.
The movement for the reclamation of the so-called abandoned lands of some of the older States is quite apt to be hurt by unreliable promoters.
Misrepresentation and Overvaluation.—Not only do some promoters misrepresent propositions for the purpose of receiving gain therefrom, but they often advance the sale price unduly. Many examples of this kind have come to my attention. Two weeks ago I received a prospectus from Oklahoma, advertising lead and zinc land for sale at $6.00 a block, twenty feet square, making 1,089 blocks in the tract of ten acres. This would be $6,534 for the land. I happen to know the region and own land close to the small tract. The fact is that one can purchase such a place at $10.00 or less an acre, or at not to exceed $100 for ten acres. So the difference between $100 and $6,534 is too much of an advance for those who invest. What do you think of such a deal? The persons handling it use the general statement of a geologist which recites the fact that the geological formation that contains zinc and lead in the Joplin District, some thirty miles distant, extends through the promoted land. This statement has no specific importance, but is sufficient for persons who accept the “get-rich-quick” bait. It is my judgment that Oklahoma should not permit such a clean-up. (Applause.)
The public craze for land makes it easy for promoters to do their work. Many farmers, dominated by a spirit of consideration for their children, accept the “spiel” and assurance of the “dopster,” sell in agricultural regions and move onto nearly worthless land, believing that it will become about like the old home place in time, and that each child will then have a farm and home. May we not say that he who deceives a family in this way is a mean man? (Applause.) Can you think of a worse service to a community? Certain railroads are not free from blame in that they promote this traffic. The farmer who accepts the bad “dope” is also to blame. It has taken a long time for the people to learn that mere belief, opinion, and sentiment are not strong enough forces to overcome the influence of land not suited for agriculture.
If our land seekers could realize how important and far-reaching is this matter of choosing favorable places for home building, they would be less easily led astray. They would consider soil, climate, water supplies and other necessary conditions of success, as they actually exist, and be governed less by the old arguments and slogans so often used for land development in general. They would pay less attention to deceptive literature written for the special purpose of securing emigrants and sales. They would inquire into the methods whereby this phase of the land business is carried on, and avoid being carried off of their feet, especially when on “home-seekers’” excursions and worked by a well-organized plan.
Formerly, the newer States encouraged the work of grafting land men. Time has shown, however, that this was bad business and really a drawback to permanent development. The present trend is to conserve the interests of those who go onto and manage the land, making it easier for them to succeed. They are assisted by the publicity of useful facts and the censure of fraud. Furthermore, it is coming to be recognized that State emigrant agents, agricultural experiment stations, soil surveys and Conservation Commissions should not lend their support to any interest other than that which brings the best results to the people of the State. They should stand for the policies that insure permanent development and do so as their plain duty. Do you know how public men are urged and tempted to further the interests of promotion concerns and that there are plenty of opportunities to sell one’s influence? That it requires diligence and courage to rightly serve the State? Happily, our public-spirited citizens who have at heart the best and largest interests of their States, stand strongly against misrepresentation whether unintentional or not. They claim that doubtful promotion serves only in closing deals, and in directing settlers to the land, but that in the long run the process works a positive harm to the misguided people and to the State as well, if the land is not suited for habitation. Fortunately, most States are coming to this viewpoint. They have learned that it pays to tell the truth when transplanting a population and directing the permanent development of a State.
Where do you delegates stand on this proposition, and what is to be the attitude of your States?
Promoters’ Methods.—Do you know the signs of fraud? They are exposed in the method used in securing money from the community. The plan is about as follows: A selling scheme is perfected. It is constructed in a way that leaves no flaws, apparently. Each agent learns the scheme; he becomes skilled in applying it to the different types of individuals. Too often it is of little concern whether the project has merit or not. The chief object is to get money. Extravagant claims are made in which returns of 100 per cent. or more a year are said to be a sure thing. The influence of nationality, church, and fraternal orders are brought to bear in securing sales. The support of persons with good standing in the community is secured. Those who assist the promoter are given a reduction for their influence. The dope is given them often and systematically. So they soon realize the greatness of the project. This is promotion psychology. The land is offered at high enough price to permit reduction for quick sale, which bait works in many cases. Persons filled with greed for money are easy victims. The above kind of thing, though less common than formerly, is practiced in most States, and the wonder of it is that it can continue and why it is permitted to continue. It is fraudulent and should be stopped entirely if we are to conserve the interests of good people.
Effects of Land Fraud on Local Business.—Many families lose enough through fraudulent entanglements to give a college education to the son, a piano to the girls, and general improvements for the home or farmstead. The drain is away from home and school. Perhaps the greatest loss is the people who are lured to places where in many cases they are less well off than in the old home. Persons who lose in bad deals become suspicious of real business done by reliable men in the community. They refuse to invest in local developments in which the returns are sure, though smaller than those promised by promoters. Many are put out of business entirely by land frauds.
Do you agree with me in that it is not good business to farm the land, cash in its fertility and then scatter the proceeds among grafters? Let us quit chasing the ends of the rainbow, and turn our attention more towards the right use of the fruits of our labor in education and home building. (Applause.)
Regulation.—There are many laws for the conservation of business. The Federal Government prosecutes persons who make fraudulent use of the mails. There is opportunity under the law to recover on account of misrepresentation; but these laws are not sufficient. Public sentiment is now ripe for the enactment of special laws to conserve business against land frauds. Nebraska has made a special study of the subject, reduced fraudulent procedure by the force of publicity and public opinion, and will pass special conservation laws in its next Legislature. Kansas has gained distinction by the enactment of the well-known “Blue Sky Law.” This is good so far as it goes. It provides for registration, reports, supervision and penalties. Many States, as, for example, Wisconsin, Wyoming, and Texas, are to undertake legislation of this kind at the next sessions of their Legislatures.
Provision should be made in the special act against land frauds for field examination and report upon properties offered for sale. This field work might be done by the State Soil Survey, or the State Conservation Commission.
An essential feature of the act will be the registration of realty agents and the furnishing of proof that they are competent and reliable. This will reduce the number of land agents and insure the responsibility of those permitted to do business. The Western realty men are now framing a law of this kind to meet the needs of the various States.
Apparently there is no opposition to the proposed legislation for it is to conserve business and eliminate fraud. It is sure to receive the support of all unless we except those who make gain through doubtful promotion. If opposition appears before the various Legislatures it will have the embarrassing position of being on the side of fraud.
Summary.—Let me close this report with the following statements:
1. This discussion, though favorable to reliable land agents is against doubtful promoters.
2. Realty agents should have a practical knowledge of land classification, soil types and the land business.
3. Reliable and competent real estate agents have an important place in the State. They are against promoters and promotion values.
4. No one should deal with an agent who is not favorably known and is not good at the bank.
5. See the land you purchase. Also get a reliable report upon it from a competent, disinterested party. Base your transaction on facts—not on opinions. Get a good title and not a mere promise to deliver.
6. Keep out of the “get-rich-quick” schemes. Quit chasing the ends of the rainbow. If your fever gets too high, consult a banker.
7. As a rule, it is best to avoid the “home seekers’” excursions and “boom” literature, unless you are sure of your footing.
8. Consult disinterested old-time residents whose places show that they are actual, successful tillers of the soil in the locality where you are to buy. They will give you the farm value, and not the promotion value.
Ladies and gentlemen, are you ready to support in this important movement? (Applause.)
Chairman Wallace—I am sorry we haven’t half an hour longer to give Dr. Condra to skin those skunks.
We will hear from Mr. Charles S. Barrett, President of the Farmers’ Union, and finally from Mrs. Lund, of California. I want these speakers to show their appreciation, their gallantry, by giving her the last five minutes, and I am going to call them down unless they do.
Dr. Condra—It has been suggested that we close this discussion in one minute. I am very sorry that neither Mr. Barrett, or Dr. Bateman can be heard.
My friends, when a State puts upon its statute book an adequate law, no fake concerns will seek to do business in that State. That is true. Now, we ask that your committee be continued to the end that we may report the conditions of the soil and the development of the soil. I thank you and give ten minutes additional time to the lady.
Chairman Wallace—It is my great pleasure to introduce Mrs. Haviland H. Lund, of California, whose subject is the “Conservation of Land and the Man.”