The Life of John Marshall, Volume 3: Conflict and construction, 1800-1815

by Albert J. Beveridge

Some New Englanders were suspicious. "The Georgia land speculation calls for vigor in Congress. Near fifty millions acres sold ... for a song," wrote Fisher Ames.[1417] But such cautious men as Ames were few in number and most of them were silent. By the time reports reached Boston that the Legislature of Georgia was about to repeal the act under which the companies had bought the lands, numerous sales, great and small, had been made. In that city alone more than two millions of dollars had been invested, and this had been paid or pledged by "every class of men, even watch-makers, hair-dressers, and mechanics." The Georgia Company conveyed eleven million acres on the very day that the Legislature of Georgia passed the bill declaring the "usurped act" to be null and void and asserting the title of the whole territory still to be in the State.[1418]

Three weeks later, the news of the enactment of the rescinding law was published in the New England metropolis. Anger and apprehension seized the investors. If this legislation were valid, all would lose heavily; some would be financially ruined. So a large number of the purchasers organized the New England Mississippi Company for the purpose of defending their interests. A written opinion upon the validity of their titles was procured from Alexander Hamilton, who was then practicing law in New York and directing the Federalist Party throughout the Nation. He was still regarded by most Federalists, and by nearly all moneyed men, as the soundest lawyer, as well as the ablest statesman, in America.

Hamilton's opinion was brief, simple, convincing, and ideally constructed for perusal by investors. It stated the facts of the enactment of the sale law, the fulfillment of the conditions of it by the purchasers, and the passage of the rescinding act. Hamilton declared this latter act to be invalid because it plainly violated the contract clause of the Constitution. "Every grant ... whether [from] ... a state or an individual, is virtually a contract." The rescinding act was therefore null, and "the courts of the United States ... will be likely to pronounce it so."[1419]

Soon after its passage, President Washington had received a copy of the Georgia land sale act. He transmitted it to Congress with a short Message,[1420] stating that the interests of the United States were involved. His principal concern, however, and that of Congress also, was about the Indians. It was feared that depredations by whites would cause another outbreak of the natives. A resolution was adopted authorizing the President to obtain from Georgia the cession of her "claim to the whole or any part of the land within the ... Indian boundaries," and recommending that he prevent the making of treaties by individuals or States "for the extinguishment of the Indian title." But not a word was said in Washington's Message, or in the debate in Congress, about the invalidity of the Georgia sale law or the corrupt methods employed to secure the enactment of it.[1421]

Two bills to protect the Indians failed of passage.[1422] Just before adjournment the House adopted a Senate resolution which had been offered by Senator Rufus King of New York, requesting that the Attorney-General report to the Senate all data bearing on Georgia's title to the territory sold to the land companies; but again the invalidity of the sale law was not even suggested, and the corruption of the Georgia Legislature was not so much as referred to.[1423]

A year later, Charles Lee, Washington's Attorney-General, transmitted to Congress an exhaustive report containing all facts.[1424] This report was referred to a special committee, headed by Senator Aaron Burr of New York, who, on May 20, 1796, reported a resolution authorizing the President to treat with Georgia for the cession of the territory.[1425] Once more no attention was paid to the fraud in the sale act, or to the rescinding act of the Georgia Legislature.

But when the public finally learned of the "Yazoo Fraud" and of the repudiation by the Georgia Legislature of the corrupt law, the whole country was deeply stirred. A war of pamphlets broke out and was waged by both sides with vigor and ability. Abraham Bishop of New Haven, Connecticut, wrote a comprehensive answer to the prospectus of the land companies, and copies of this pamphlet, which appeared in four parts, were widely circulated.[1426] Georgia had no fee in the lands, said Bishop.[1427] Sales to "innocent purchasers" could not give them what Georgia had no right to sell. Neither could such a device validate fraud. Much litigation had already grown out of the swindle, and the Georgia rescinding act had "brought ... matters to a crisis, and one decision of the supreme court of the United States may probably influence the decisions of lower courts."[1428] Bishop discussed brilliantly, and at length, every possible question involved. The power of the State to pass and repeal laws was "wholly uncontrolable,"[1429] he asserted. The history of other dishonest and imprudent speculations was examined—the South Sea Bubble, the Mississippi Bubble,[1430] and the interposition of the legislative power of Great Britain in the one case and of France in the other. Should like power be denied in America? Georgia's rescinding act "nipt in the bud a number of aspiring swindlers."[1431] Courts could not overthrow such legislation. The "sacredness of contracts" was the favorite cloak of fraud. Bishop urged buyers to resist the recovery of money pledged in their purchase notes and, by so doing, to restore "millions of dollars ... to the channels of industry."[1432]

Hard upon the publication of the first number of Bishop's pamphlet followed one for the land companies and investors. This had been written by Robert Goodloe Harper of Maryland a few months after Hamilton had rendered his opinion that the Georgia grant was inviolable.[1433] It was an able and learned performance. The title of Georgia to the lands was carefully examined and held to be indefeasible. The sale of 1795 was set forth and the fact disclosed that Georgia had appropriated one hundred thousand dollars of the purchase money immediately upon the receipt of it.[1434] It was pointed out that the rescinding act ignored this fact.[1435]

Harper argued that only the courts could determine the validity and meaning of a law, and that no Legislature could annul a grant made by a previous one. To the Judiciary alone belonged that power.[1436] The sale law was a contract, fully executed; one party to it could not break that compact.[1437] If Georgia thought the sale act unconstitutional, she should have brought suit in the United States Court to determine that purely judicial question. The same was true as to the allegations of fraud and corruption in the passage of the measure. If any power could do so, the courts and they alone could decide the effect of fraud in procuring the enactment of a law. But even the courts were barred from investigating that question: if laws could be invalidated because of the motives of members of lawmaking bodies, "what a door would be opened to fraud and uncertainty of every kind!"[1438]

Finally, after a long altercation that lasted for nearly three years, Congress enacted a law authorizing the appointment of commissioners to settle the disputes between the National Government and Georgia, and also to secure from that truculent sovereignty the cession to the Nation of the lands claimed by the State.[1439] In the somewhat extended debate over the bill but little was said about the invalidity of the Yazoo sale, and the corruption of the Legislature that directed it to be made was not mentioned.[1440]