A Stake in the Land Part 4

On February 12, 1919, in Cincinnati, Ohio, sixteen land swindlers of the McAlester Real Estate Exchange, of McAlester, Oklahoma, were found guilty by a jury in Federal court. The company's land-advertis.e.m.e.nt literature was so worded as to convey the impression that the McAlester company was acting as an agent of the government in the sale of Indian lands. The prosecution was largely centered on the distribution among the customers of a tract of 41,000 acres in Oklahoma. It was charged that the president of the company secured an option on these lands when he found that he was unable to buy sufficient land at the government sale of Indian lands to fill his contracts.

It was also charged that the company perpetrated a fraud on its customers when it took $135 as a fee for locating and purchasing land, agreeing to act as attorney and agent for the customer, and then sold the land that it had bought privately at a profit. These contracts were, in the opinion of the government, so worded as to convey the impression that in paying for the locating and bidding the "party of the second part" was also making a payment on the land and was encouraged in the belief that his land would be in the midst of areas yielding oil and other mineral products as well as timber. Timber-right frauds also were alleged. The company had during 1917 collected from its victims, who lived in all parts of the country, nearly $1,000,000. It was revealed also that given plots of land had been sold to more than one buyer.

The foregoing instances indicate that companies formed for the purpose of exploiting and deceiving land settlers have succeeded. With the increasing tide of new immigration, it may be possible to ensnare even more unwary persons. But there have been a sufficient number of exposes, as well as court decisions, to make the business of fraudulent land promotion a dangerous one. All types of real-estate dealers are increasingly realizing the need for making their transactions aboveboard and honest. Steps to this end are being taken by the better cla.s.s of dealer.

[6] _California Commission on Land Colonization and Rural Credits_, 1916. pp. 50-53.

IV

INDIVIDUAL LAND DEALERS

Except for government land grants and homestead acts, land dealing and colonization in the United States have, up to very recent times, been entirely in private hands. Land is one of the necessities of life; land dealing, consequently, is one of the most important features in social and economic relations. Yet it has been left unregulated, with the result that land dealing is now the most chaotic sort of business, one which has not worked out its own definite methods, rules, and traditions, as banking and other branches of commerce and business have done. It may even be said that people who deal in land have fallen, in the eyes of the public, into the ranks of those open to suspicion.

In the field investigation for this study, land dealing was considered to be an important phase of the problem of Americanization in rural districts. Based upon the experiences and facts collected, the picture may be drawn as follows:

According to their methods, private land dealers may be cla.s.sified as follows:

(1) Land "sharks," divided between those acting outside the law and those acting within the law; (2) the ordinary real-estate dealer--of two types--the lower, selfish, narrow-minded, the higher, public-spirited; (3) "realtors"; (4) land-colonizing companies.

LAND SHARKS

Land sharks are of two distinct varieties. One type is composed of men of a criminal character. The words "lawful" and "unlawful" have no meaning for them. They often sell land as their own which they do not own, or sell land other than they have promised or even shown to the buyer. Their only aim is to cheat the latter out of his money and to escape the penalty of the law.

These pirates injure both land seekers and legitimate real-estate men.

They hang about the trains, railroad stations, and all points where there is a chance of attracting the land seekers. They are sometimes able to entice those who are being brought in by reputable land men.

Often the pirates are of the same nationality as the immigrants and by clever emphasis on this common bond and by skillful manipulation of truth and lies they steal the men away to look at land which they call their own. The land pirates do not advertise, but live on the advertising that the reputable land men do. As a result the latter curtail their advertising and do a comparatively small amount of it, since they are prevented from realizing the full profits due on the investment. This is a situation that forces the land men to realize the need of a licensed real-estate profession.

The president of a land company in Wisconsin gives this description of the operations of the land sharks and of the effects of their activity:

Relative to the land pirates, it is hard to estimate how much land they sell, but we find that for every customer they do sell to they queer deals for this country of from ten to twenty-four which the other land men might have landed.... I estimate that within the last two years the city of ---- has lost from fifty to one hundred customers for land though these pirates, who infest the depot and meet all trains.... Their first act is to find that the man is looking for land and to find out whom he is expecting to see, for they usually come up with some definite proposition to look over.

The pirate then proceeds to throw cold water on the locality that he is to look over, and very often challenges the integrity of the party whom he is going to see. He does this preparatory to starting in to taking the man off and showing him something of his own.

Frequently these men do not own a foot of land, but have a few pieces for sale on commission. They are usually irresponsible men and often put through some rocky deals, and it is through them more than anything else that the real-estate men have often got very bad names for the way they have handled customers who come up to buy land. When the customer's mind has been poisoned against the party whom he was coming to see, and against the particular piece of land or locality where he had formerly planned to buy, he is often ready to quit and go back, and it is very hard for anyone thereafter to deal with him, because his confidence has been shaken in the people and the country.

The other type of land shark is composed of men who act within the law, but, for their own gain, apply methods which are mildly called "sharp"

or "unethical." They either misrepresent the qualities of the land they offer, or charge a higher price than the land is worth, or make in the contract such stipulations as will afterward ruin the settler. They profit by the settlers' failures, for each settler adds something to the improvement of the land before the conditions of the land-purchase contract which he is unable to meet compel him to leave the land. The land shark sells the land to a new settler for a still higher price, capitalizing the improvements made by the former settler. With the new settler the process is repeated, and so it goes, like an endless chain.

It is similar to the method of splitting fees practiced by private employment offices and foremen who keep men coming and going.

There are no data collected to show the actual extent of the activities of the land sharks, but, judging by the stories told by the immigrants, by records of court proceedings, by suspicious land advertis.e.m.e.nts in newspapers, especially in the smaller, less reliable foreign-language papers, and by the number of cases brought to the attention of the state immigration commissioners, it is safe to state that the immigrants suffer very greatly from the land-shark evil.

LOWER TYPE OF LAND DEALER

One group of the ordinary type of land dealer might be characterized as being composed of narrow-minded, hard, and even heartless business men, working solely for their own interests. Their business consists merely in buying and selling land as rapidly as possible. In making prices for land and in making contract stipulations with the buyers, they do not "monkey,"

as some of them say. As a rule they do not charge a higher price than the land is worth--that is, not higher than the prevailing market price in a particular locality. They also avoid unreasonable or impossible contract stipulations. When land is sold, when the contract has been signed by both sides, then their care and interest in regard to the land and its owner end. If the buyer later fails to meet the contract stipulations in any particular the land dealer sees to it that he leaves the land at once. The dealer then advertises and sells the land again. Usually, no compensation for improvements made by the settler, in case of his failure, is stipulated in the contract. If there is any gain to the land dealer from the failure of a settler, the dealer often claims that such gain is more than offset by heavy expenses, such as for advertising, agents' commissions, and the like, in finding a new buyer.

The land dealer gives little or no consideration to the causes of the failure of the settler. According to the observation of the writer, a large number of failures in settling on land are not due to the personal defects or weakness of the settlers, but are due to external causes, such as lack of capital and credit, lack of market, poor roads, etc. The settlers who have failed owing to such causes might be criticized for their poor judgment in selecting the land, but the land dealers might equally be criticized for not warning the settlers of the difficulties before they buy the land.

The land dealers ought to know the market facilities, the extent of capital and credit required for success on a particular piece of land and in a particular locality. As a matter of fact, dealers of the type under discussion do not warn the settlers. They give advice of an optimistic character and they apply to the settler the Darwinian theory of survival of the fittest. A number of these land dealers said to the writer:

Well, it is up to the settler himself, either to succeed or to fail. If he fails, he has himself alone to blame, and he must give place to the settler who is able to succeed. There is no room for weaklings on my land or anywhere else in this world.

The results which follow in the wake of such land-settlement policies are described in the following extract from the letter of a county agent. He writes from a locality where many of the settlers are immigrants:

In some parts of this country ... the statistics show that there is a complete change in the farmers every seven years. That means that several farmers are coming and going all the time. Several farmers are paying out taxes and interest on something they will never own.... As to the land companies doing things for the settler, in the most part they take care of the new man for a time, but I notice that they close them out, too, if taxes and interest are not kept up pretty well.

A similar condition is described in the letter below from a county agent in the same state:

The land companies in this county are not putting forth any special effort to make it easier for the new settlers to succeed. As far as I know, all the land companies in this county are reliable. They live up to their agreements with the settlers. However, I can also vouch for the statement that many of our farms, with very little clearing, are continuously changing hands.

The importance of advice and warning from the land company to the settler, and the deplorable infrequency with which it is given, are spoken of in this statement by a county agent:

So far the ... settler's only means of protection has been the county agent. From the county agent the settler gets the true condition of the land, climate, and possibilities in general, of the particular region into which he is going. Too often, though, the settler is met at the train by the real-estate agent, and this agent does not let his prospective buyer get in touch with anyone else until after he has been sold a piece of land. After the settler has bought his land the real-estate man thinks that his connection with him has ceased, and he is no longer interested in him other than to see that the promised payments are paid when due.

THE PUBLIC-SPIRITED LAND DEALER

The second group of the ordinary type of land dealer, though not so large as the first group, consists of men who have a broader outlook upon their business and work. While they also are after personal profit, they understand that they are rendering, in return for their profit, a service not only to the land buyer, but also to the public.

Accordingly, they are considerate of the settler, try to make him successful, and, having the social point of view, they promote education, welfare work, and other community interests among the settlers.

The writer has met a number of such broad-minded and public-spirited land dealers. Some of them were so modest as to deny that they were interested in or were keeping in mind any public or social end in their business.

Well, I am after profit, nothing more. By helping the settler to make a success through extension of credit to him, through demonstrations, through finding a market for his products, and through organizing community work, I am only advertising my land and attracting new settlers. That is, I am applying a little bit of Henry Ford's methods to the land-settlement business, that's all!

This explanation was given by a large land dealer in one of the Middle Western states. Further conversation with him showed that he took great pride in the fact that the settlers on his land esteemed him highly and had confidence in him.

It is land men of this type that a county agent from the North Middle West speaks of in these words:

The land men in this county all believe that it is to their own interests to have every settler a satisfied settler. They are getting away from the idea that they are done with the settler as soon as they sell him a piece of land. They now believe that they are just starting their relations with the settler when he buys from them.

Another county agent writes that he believes that

the real-estate men are beginning to try to see that the settlers to whom they sell land make good. They are doing this by being lenient with their conditions and by picking only the better types of land for settlement.

One of the real-estate men who have this more public-spirited view of their work describes his relations with the settlers as follows:

I try to a.s.sist the settler by giving him all the moral support and encouragement possible, by keeping friendly with him so he feels free to come to me with his every problem. I stand ready to finance any deserving settler for the full purchase price of good milk cows, or to buy a pig or two, or for any other thing that is sure to help him over the hill. Especially, I go among them organizing farm loan a.s.sociations and community-center gatherings, thereby bringing the whole family the general social opportunities that every normal family craves and has the right to expect.

[Ill.u.s.tration]

[Ill.u.s.tration: FRIENDLY a.s.sISTANCE MAKES PIONEERING LESS BAFFLING]

A real-estate company with offices in Chicago states that it a.s.sists the individual settler in many ways: