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

Moreover, the titles of the Indians, who occupied the country and who were its real owners, had not been extinguished. Under the Constitution, the National Government alone could deal with the tribes, and it had long been urging Georgia to cede her claims to the United States, as Virginia and Connecticut had done. Indeed, the State had once offered to make this cession, but on such terms that Congress had refused to accept it. The purchasers now took whatever title Georgia had, subject to these burdens, the State to be saved from all annoyance on account of them.

The tribes were powerful and brave, and they had been prompt and bold in the defense of their lands. The Creeks alone could put nearly six thousand fighting men in the field, and the Choctaws had more than four thousand trained warriors.1377 The feeble and impoverished State had never been able to subdue them, or to enforce in the slightest degree the recognition of the State's title to the country they inhabited. Georgia's right to their lands "depended on her power to dispossess the Indians; but however good the title might be, the State would have been fortunate to make it a free gift to any authority strong enough to deal with the Creeks and Cherokees alone."1378

The sale of the territory was not a new or novel project. Six years earlier the State had disposed of twenty-five million five hundred thousand acres of the same territory to four land companies on much poorer terms.1379 Jefferson, then Secretary of State, rendered a careful opinion on the right of Georgia to make the grant.1380 These purchasers had tendered payment in South Carolina and Continental scrip that was practically worthless; the Treasurer of Georgia had properly refused to accept it; and there ended the transaction as far as the State was concerned. A suit was later brought against Georgia by the grantees1381 to compel the performance of the contract; but the Eleventh Amendment of the Constitution thwarted that legal plan. So these speculators dropped the matter until the sale just described was made to the new companies six years later.

The most active promoters of the first purchasing companies, in 1789, were mere adventurers, although at first Patrick Henry and other men of honor and repute were interested in the speculation. Henry, however, soon withdrew.1382 The consummation of their deal with Georgia required the payment of sound money and bona-fide settlement by actual tillers of the soil. Also, the adventurers got into trouble with the Indians, became gravely involved in Spanish intrigue, and collided with the National Government;1383 so the enterprise lost, for a time, all attractiveness for these speculators.

The new land companies, on the other hand, were for the most part composed of men of excellent reputations.1384 At the head of the largest, The Georgia Company, were United States Senator James Gunn and United States Attorney for the District of Georgia, Mathew McAlister; associated with them, in addition to Judges Stith and Pendleton, and Justice Wilson, were Robert Goodloe Harper, Representative in Congress from Maryland, Robert Morris, the financier of the Revolution, and others of substance and position.1385 Also, as has been stated, they paid for their lands in the money called for by the act – the best money then circulating in America. The first sales of Indian lands to which Georgia claimed title were known as the "Yazoo" speculation, and this designation stuck to the second transaction.

In the six years that had intervened between the sales to the irresponsible land-jobbers of 1789 and the solvent investors of 1795, an event of world importance had occurred which doubled and trebled the value of all cotton-bearing soil. Eli Whitney, a Connecticut school-teacher twenty-seven years of age, had gone to Georgia in 1792 to act as a private tutor. Finding the position taken, he studied law while the guest of the widow of General Nathanael Greene. This discerning woman, perceiving that the young man was gifted with inventive genius, set him to work on a device for separating cotton from the seed. The machine was built, and worked perfectly. The news of it traveled with astonishing rapidity throughout Georgia and the South. The model was stolen; and so simple was the construction of it that everywhere in cotton-growing lands it was freely reproduced by planters great and small. The vast sweep of territory stretching from Georgia to the Father of Waters, the best cotton land in the world, thus rose in value as if the wand of a financial deity had been waved over it. Settlers poured into Georgia by the thousand, and Indian atrocities were now as little feared as Indian rights were respected.1386

The purchase of the unoccupied Georgia lands by the bona-fide, if piratical, land companies of 1795 became, therefore, an adventure far more valuable in possibilities for the investors, and incomparably more attractive in the probability of political advantage to those who resisted it, than the innocuous and unopposed sale to the Yazoo swindlers of six years previous.

So it fell out that the mechanical genius of Eli Whitney, in 1793, called into action, exactly eighteen years afterward, the judicial genius of John Marshall. His opinion in Fletcher vs. Peck was one of the first steps toward the settling of the law of public contract in the riotous young Republic – one of the earliest and strongest judicial assertions of the supremacy of Nationalism over Localism. And never more than at that particular time did an established rule on these vital subjects so need to be announced by the highest judicial authority.

Since before the Revolution, all men had fixed their eyes, hopes, and purposes upon land. Not the humble and needy only, but the high-placed and opulent, had looked to the soil – the one as their chief source of livelihood, and the other as a means of profitable speculation. Indeed, dealing in land was the most notable economic fact in the early years of the American Nation. "Were I to characterize the United States," chronicles one of the most acute British travelers and observers of the time, "it should be by the appellation of the land of speculation."1387

From the Nation's beginning, the States had lax notions as to the sacredness of public contracts, and often violated the obligations of them.1388 Private agreements stood on a somewhat firmer basis, but even these were looked upon with none too ardent favor. The most familiar forms of contract-breaking were the making legal tender of depreciated paper, and the substitution of property for money; but other devices were also resorted to. So it was that the provision, "no state shall pass any law impairing the obligation of contracts," was placed in the Constitution.1389 The effect of this on the public mind, as reported by conservatives like Marshall, is stated in the Commercial Gazette of Boston, January 28, 1799: "State laws protected debtors" when they "were citizens … [and] the creditors foreigners. The federal constitution, prohibiting the states to clear off debts without payment, by exacting justice, seemed … to establish oppression." The debtors, therefore, "pronounced … the equal reign of law and debt-compelling justice, the beginning of an insidious attack on liberty and the erection of aristocracy."

The "contract clause" of the Constitution was now to be formally challenged by a "sovereign" State for the first time since the establishment of the National Government. Georgia was to assert her "sovereignty" by the repudiation of her laws and the denial of contractual rights acquired under them. And this she was to do with every apparent consideration of morality and public justice to support her.

The tidings of the corruption attending the second "Yazoo" sale were carried over the State on the wings of fury. A transaction which six years before had met with general acquiescence,1390 now received deep-throated execration. The methods by which the sale was pushed through the Legislature maddened the people, and their wrath was increased by the knowledge that the invention of the Connecticut schoolmaster had tremendously enhanced the value of every acre of cotton-bearing soil.

Men who lived near Augusta assembled and marched on the Capital determined to lynch their legislative betrayers. Only the pleadings of members who had voted against the bill saved the lives of their guilty associates.1391 Meetings were held in every hamlet. Shaggy backwoodsmen met in "old-field" log schoolhouses and denounced "the steal." The burning in effigy of Senator Gunn became a favorite manifestation of popular wrath. The public indignation was strengthened by the exercise of it. Those responsible for the enactment of the law found it perilous to be seen in any crowd. One member left the State. Another escaped hanging only by precipitate flight.1392 Scores of resolutions were passed by town, rural, and backwoods assemblages demanding that the fraudulent statute be rescinded. Petitions, circulated from the "mansion" of the wealthy planter to the squalid cabin of the poorest white man, were signed by high and low alike. The grand juries of every county in Georgia, except two, formally presented as a grievance the passage of the land sale act of 1795.

Among other things, the land sale act required the Senators and Representatives of Georgia in Congress to urge the National Government to speed the making of a treaty with the Indian tribes extinguishing their title to the lands which the State had sold. Upon receiving a copy of the nefarious law, Senator James Jackson of Georgia laid it before the Senate, together with a resolution declaring that that body would "advise and consent" to the President's concluding any arrangement that would divest the Indians of their claims.1393

But although he had full knowledge of the methods by which the act was passed, the records do not show that Jackson then gave the slightest expression to that indignation which he so soon thereafter poured forth. Nor is there any evidence that he said a word on the subject when, on March 2, 1795, Georgia's title again came before the Senate.1394 Some time afterward, however, Senator Jackson hurried home and put himself at the head of the popular movement against the "Yazoo Frauds." In every corner of the State, from seaport to remotest settlement, his fiery eloquence roused the animosity of the people to still greater frenzy. In two papers then published in Georgia, the Savannah Gazette and the Augusta Chronicle, the Senator, under the nom de guerre of "Sicillius," published a series of articles attacking with savage violence the sale law and all connected with the enactment of it.1395

It came out that every member of the Legislature who had voted for the measure, except one,1396 had shares of stock in the purchasing companies.1397 Stories of the extent of the territory thus bartered away kept pace with tales of the venality by which the fraud was effected. Bad as the plain facts were, they became simply monstrous when magnified by the imagination of the public.

Nearly every man elected1398 to the new Legislature was pledged to vote for the undoing of the fraud in any manner that might seem the most effective. Senator Jackson had resigned from the National Senate in order to become a member of the Georgia House of Representatives; and to this office he was overwhelmingly elected. When the Legislature convened in the winter of 1795-96, it forthwith went about the task of destroying the corrupt work of its predecessor. Jackson was the undisputed leader;1399 his associates passed, almost unanimously, and Governor Irwin promptly approved, the measure which Jackson wrote.1400 Thus was produced that enactment by a "sovereign" State, the validity of which John Marshall was solemnly to deny from the Supreme Bench of the Nation.

Jackson's bill was a sprightly and engaging document. The preamble was nearly three times as long as the act itself, and abounded in interminable sentences. It denounced the land sale act as a violation of both State and National Constitutions, as the creation of a monopoly, as the dismemberment of Georgia, as the betrayal of the rights of man. In this fashion the "whereases" ran on for some thousands of words. On second thought the Legislature concluded that the law was worse than unconstitutional – it was, the "whereases" declared, a "usurped act." That part of the preamble dealing with the mingled questions of fraud and State sovereignty deserves quotation in full:

"And Whereas," ran this exposition of Constitutional law and of the nature of contracts, "divested of all fundamental and constitutional authority which the said usurped act might be declared by its advocates, and those who claim under it, to be founded on, fraud has been practised to obtain it and the grants under it; and it is a fundamental principle, both of law and equity, that there cannot be a wrong without a remedy, and the State and the citizens thereof have suffered a most grievous injury in the barter of their rights by the said usurped act and grants, and there is no court existing, if the dignity of the State would permit her entering one, for the trial of fraud and collusion of individuals, or to contest her sovereignty with them, whereby the remedy for so notorious an injury could be obtained; and it can no where better lie than with the representatives of the people chosen by them, after due promulgation by the grand juries of most of the counties of the State, of the means practised, and by the remonstrances of the people of the convention, held on the 10th day of May, in the year 1795, setting forth the atrocious peculation, corruption, and collusion, by which the usurped act and grants were obtained."1401

At last the now highly enlightened Legislature enacted "that the said usurped act … be declared null and void," and that all claims directly or indirectly arising therefrom be "annulled." The lands sold under the Act of 1795 were pronounced to be "the sole property of the State, subject only to the right of treaty of the United States, to enable the State to purchase, under its pre-emption right, the Indian title to the same."1402

Such was the law which John Marshall was to declare invalid in one of the most far-reaching opinions ever delivered from the Supreme Bench.

The Legislature further enacted that the "usurped act" and all "records, documents, and deeds" connected with the Yazoo fraud, "shall be expunged from the face and indexes of the books of record of the State, and the enrolled law or usurped act shall then be publicly burnt, in order that no trace of so unconstitutional, vile, and fraudulent a transaction, other than the infamy attached to it by this law, shall remain in the public offices thereof." County officials were, under the severest of penalties for disobedience, directed to "obliterate" all records of deeds or other instruments connected with the anathematized grants, and courts were forbidden to receive any evidence of title of any kind whatever to lands from the grantees under the "usurped act."1403

The Governor was directed to issue warrants for repayment to those who, in good faith, had deposited their purchase money, with this reservation, however: "Provided the same shall be now therein."1404 After six months all moneys not applied for were to become the property of Georgia. To prevent frauds upon individuals who might otherwise purchase lands from the pirate companies, the Governor was directed to promulgate this brief and simple act "throughout the United States."

A committee, appointed to devise a method for destroying the records, immediately reported that this should be done by cutting out of the books the leaves containing them. As to the enrolled bill containing the "usurped act," an elaborate performance was directed to be held: "A fire shall be made in front of the State House door, and a line formed by the members of both branches around the same. The Secretary of State1405 … shall then produce the enrolled bill and usurped act from among the archives of the State and deliver the same to the President of the Senate, who shall examine the same, and shall then deliver the same to the Speaker of the House of Representatives for like examination; and the Speaker shall then deliver them to the Clerk of the House of Representatives, who shall read aloud the title to the same, and shall then deliver them to Messenger of the House, who shall then pronounce – 'God save the State!! And long preserve her rights!! And may every attempt to injure them perish as these corrupt acts now do!!!!'"1406

Every detail of this play was carried out with all theatrical effect. Indeed, so highly wrought were the imaginations of actors and onlookers that, at the last moment, a final dash of color was added. Some one gifted with dramatic genius suggested that the funeral pyre of such unholy legislation should not be lighted by earthly hands, but by fire from Heaven. A sun-glass was produced; Senator Jackson held it above the fagots and the pile was kindled from "the burning rays of the lidless eye of justice."1407

While the State was still in convulsions of anger, a talented young Virginian of impressionable temperament went to Georgia upon a visit to a college friend, Joseph Bryan, and was so profoundly moved by accounts of the attempt to plunder the State, that a hatred of the corrupt plot and of all connected with it became an obsession that lasted as long as he lived.1408 Thus was planted in the soul of John Randolph that determination which later, when a member of Congress, caused him to attack the Administration of Thomas Jefferson.1409

Swift as was the action of the people and legislature of Georgia in attempting to recover the Yazoo lands, it was not so speedy as that of the speculators in disposing of them to purchasers in other States. Most of these investors bought in entire good faith and were "innocent purchasers." Some, however, must have been thoroughly familiar with the fraud.1410 The most numerous sales were made in the Middle States and in New England. The land companies issued a prospectus,1411 setting out their title, which appeared to be, and indeed really was, legally perfect. Thousands of copies of this pamphlet were scattered among provident and moneyed people. Agents of the companies truthfully described the Yazoo country to be rich, the climate mild and healthful, and the land certain of large and rapid rise in value.

Three of the companies1412 opened an office in Boston, where the spirit of speculation was rampant. Then ensued an epidemic of investment. Throngs of purchasers gathered at the promoters' offices. Each day prices rose and the excitement increased. Buying and selling of land became the one absorbing business of those who had either money or credit. Some of the most prominent and responsible men in New England acquired large tracts.1413 The companies received payment partly in cash, but chiefly in notes which were speedily sold in the market for commercial paper. Sales were made in other Northern cities, and many foreigners became purchasers. The average price received was fourteen cents an acre.1414

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.1415 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.1416

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."1417

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,1418 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.1419

Two bills to protect the Indians failed of passage.1420 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.1421

A year later, Charles Lee, Washington's Attorney-General, transmitted to Congress an exhaustive report containing all facts.1422 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.1423 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.1424 Georgia had no fee in the lands, said Bishop.1425 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."1426 Bishop discussed brilliantly, and at length, every possible question involved. The power of the State to pass and repeal laws was "wholly uncontrolable,"1427 he asserted. The history of other dishonest and imprudent speculations was examined – the South Sea Bubble, the Mississippi Bubble,1428 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."1429 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."1430