historian, author, film producer

Railroads and Timber Grants: Edward Harriman, Conservation, and the “Harriman System”

For the last several years a controversy has unfolded in the southeastern corner of Wyoming that might have importance well beyond that corner of the United States. The dispute involves deeds issued by the Union Pacific Railroad in and around 1908 and 1910 to ranchers and landowners who purchased the land from the corporation. These deeds specifically reserved the timber on the land for the railroad company. The deeds essentially severed the timber rights from the land itself and while the railroad sold the land it retained the right to the timber on it and potentially to use the land for timbering in the future. Groups of environmentalists and local interests across the West have begun to pay attention to this issue, such as the “Railroads and Clearcuts Campaign,” and to draw attention to the consolidation of natural resources and their uses in a globalized world. Most recently, the issue has come forward in Broadbent Land and Resources, L. L. C. v. Ecosystem Resources L.C. in Uinta County, Wyoming. (I have served as an expert witness in this case for the defendant.)

One of the most curious and important cases surrounding the railroad land grants and timber resources originated on the Oregon and California, a railroad chartered in 1869 but a branch of the Southern Pacific Railroad at the turn of the century. The controversy over the O and C between 1903 and 1916 led to a major U.S. Supreme Court case and an unusual Congressional Act which took the railroad’s land grant back. Richard Orsi in Sunset Limited: The Southern Pacific Railroad and the Development of the American West, 1850-1930 provides the most recent scholarly examination of this major land grant railroad and its land policies. Orsi used Southern Pacific archives, company records, and detailed intra-company correspondence to revise our understanding of the land grants to these lines and how they were managed. He finds that the Southern Pacific and the Union Pacific were on the leading edge of conservation management of resources and worked with new government agencies in the Progressive era, especially the Forest Service, to institute best practices for long-term sustained yield harvesting of timber. Far from the land monopolists of legend or the corporate ogres of an earlier deeply suspicious period of historical scholarship, the land grant railroads were progressive stewards of these limited assets to run and maintain their lines. They dispersed lands quickly to settlers and managed the timber and mineral reservations with an eye toward long-term sustainability of their operations.

Edward Harriman purchased the Union Pacific out of receivership in 1897 for over $84 million. This was an astounding sum to pay, considering that just a few years earlier an internal report estimated that the Union Pacific railroad could be rebuilt and re-equipped in its entirety for $44 million. Harriman, it seemed, was willing to pay so much because he valued the road’s mineral, timber, and land grants and other assets. According to Orsi, the Union Pacific’s policy for years had been to hold lands as long as possible so that the Union Pacific could extract and process valuable resources, especially minerals and lumber. Harriman instituted a careful review of Union Pacific land policies, and he consolidated all decision making on land sales, contracts, and deeds in his New York offices, according to later testimony by Charles Eberlein, the UP’s land commissioner. Orsi states that when Harriman (who held the Union Pacific and the Illinois Central majorities as “the Harriman Lines” or “the Harriman System”) bought the majority share of the Southern Pacific in 1901, he instituted a new regime in the Southern Pacific land office. The Southern Pacific, in contrast to the Union Pacific, had pursued a long policy of disposing of its lands quickly to “develop” the country and build up long-term business for the road. The Oregon and California’s 1869 federal land grant act included a provision to sell its lands to “actual settlers” who might occupy and build up the Northwestern region. The “homestead clause” as it was called required the railroad to sell its land grant in sections of 160 acres and for prices no higher than $2.50 per acre. The Southern Pacific acquired the Oregon and California in 1887 and with it these same provisions for that railroad’s land grant.

A few years after taking control of the Southern Pacific, Harriman instituted a no sales policy across its lines in 1903, virtually shutting down all land sales a year later. Orsi suggests that Harriman wanted to hold the lands for speculation rather than have them sold by the railroad to others who would do the same: “instead, the company was instructed to hold its lands so the railroad itself could extract, process, and use or sell its natural resources, especially ores, oil, and lumber, or speculate on higher future prices and profits.” Harriman was especially concerned about railroad ties and the fact that many buyers of railroad lands were holding the timber on them rather than bringing the lumber to market. These speculative buyers were not only waiting for higher prices for lumber but also contributing to the accelerating rise in the price of railroad ties. “Henceforth, only some logging rights would be sold,” Orsi explains, “with the land remaining in reserve for the railroads own future uses for track ties and construction materials, as well as to take advantage of increased land values. The Southern Pacific would also reserve all mineral rights to itself.” (p. 126)

Northwest logging companies and those interested in Oregon’s “development” were according to Orsi, “outraged” at the new policy to stop land and timber sales, and to manage the timber and land for the company’s long-term future. They pushed through Rep. Willis C. Hawley for the U.S. Department of Interior and Justice to sue in 1907 to recover the unsold land grant on the grounds that the Southern Pacific was in violation of the congressional mandate that the O and A’s lands be sold to settlers. Lower courts found for the government. In 1915 the U. S. Supreme Court, however, overturned lower courts after eight years of litigation in which Northwest logging companies were angry that they could no longer buy Southern Pacific lands and timber them. They argued that the railroad under its original Southern Pacific land grant had to dispose of the lands, not hold them, and that the congressional mandate was for the lands to be sold and divested to the public. The Supreme Court, however, held in 1915 that the 1869 congressional act originating the Southern Pacific had passed perfect land title to the railroad (in this case the Oregon and California Railroad, part of the Southern Pacific) and that the company had no obligation to dispose of all of the lands. Congress actually followed this ruling up in 1916 in a “revestiture” bill, and confiscated the Oregon and California lands from the Southern Pacific, paid the company for them at an average maximum price of $2.50 per acre, and then proceeded to open the lands for sale.

The 1916 Chamberlain-Ferris Act re-vested the lands in the Government and classified them for sale with the highest priority given to timberlands, defined in the act as lands with 300,000 board feet of timber per 40 acre tract. The timber lands sold by the Department of Interior would supplement the lack of sale of the other lands so that the railroad would be paid $2.50 per acre for the total.

In 1916 during the Oregon and California Land Grants hearings before the Committee on the Public Lands, House of Representatives, the attorney for the Southern Pacific, J. P. Blair, testified on “the views of the grantee [the railroad] as to its strict legal rights under the granting acts.” Blair held that the Supreme court decision in 1915 on the Oregon and California meant that “there was a complete, absolute grant except only as to the restrictions upon sale contained in the actual settler’s clause. I think therefore that the grantee, the railroad company is the complete and absolute owner of the grant except so far as the rights of ownership have been taken away by the conditions imposed by the actual settlers’ clause.” Blair went on to argue that if the railroads could not dispose of the timber apart from the land, then it therefore could only be because it would preclude settlement by actual settlers. But Blair held that clearing the lands would not interfere with selling the lands to actual settlers. That is, the railroad company held the rights to the timber and could clear and harvest the timber, which would “further the purpose of the actual settlers clause.” Blair focused his testimony on “what the grant means.” And he argued here that the actual settlers restriction could not “be construed into a prohibition under all circumstances even against clearing the land before offering it for sale to people who had no right to buy it unless they bought it for the purpose of cultivating it and making it their home.” Blair argued that the grants had two purposes–to aid the railroad and to settle the country. The former was not less important than the latter and “Congress reserved nothing to the United States, there was no remainder.” When asked if the company was always entitled to “value of the timber plus $2.50 per acre,” Blair replied that it was wherever the clearing of the land of the timber “would not be inconsistent with or defeat the purpose of the actual settlers’ clause.” Blair went on to a key point: that the logic of the dual purposes of the grant were that “whatever is not necessary or required for the one purpose should be applied to the other purpose.” So, if the sale of the timber with the land is not necessary to gain actual settlers, then “it is not obligatory to sell the timber with the land to actual settlers.

Ironically, the federal government could not sell the lands, even with the timber, fast enough and the local county governments in Oregon were furious that the lands had been removed from their tax rolls. As it turned out, timber land sales were slow because the railroad’s holdings were inland and difficult to access. As a result counties lost the revenue from these lands being withdrawn from private holding (the railroad) to the government. And, in a further twist, the counties loss in tax base support led them to create the Assoc. of Orange & California Counties to secure an advance from the federal government to pay for what the counties would have had in revenue if the lands had stayed in private railroad ownership.

Whether Harriman pursued his no-sales policy on the Southern Pacific (and O and C) as a means to speculate on the rising land values or to engage in a serious conservation-oriented policy deserves further examination and consideration. Orsi contends that Harriman may have been interested in the former as much as the latter. But Harriman’s conservationist approach should be taken seriously. Harriman was more interested in and motivated by long-term conservationist ideas and principles than Orsi gives him credit for. Indeed, Harriman implemented a comprehensive resource management system on his railroads mainly because he wanted to insure that his railroads had the timber, coal, and other resources necessary to run their operations in perpetuity. In 1907 Harriman made his views public. He gave an address before the National Irrigation Congress, noting that preservation of the forest was necessary for irrigation and for maintaining the transportation network in the future. He explained that the Union Pacific and Southern Pacific together needed 4.5 million ties annually for maintenance of the system, and called ties “the foundation of the transportation line.” Furthermore, Harriman explained the intent of the Union Pacific Railroad: “we have given that subject a great deal of thought, and we are in control of, or ownership of, a considerable area of timber land in this western country and especially in Oregon, and, Mr. Chairman, we are not holding these lands for speculation; we are holding these lands to protect you people in the future–in twenty, thirty, or fifty years from now. We will let other people cut the forests; we will use the ties from their ground; and when the time comes we intend to have a reserve with which we can maintain these great transportation lines for those that come after, that they may not accuse us of wasting the resources which we had at our command.” It is significant that Harriman pointed out that after receivership practically the entire Union Pacific line had to be re-built/re-laid with ties. George Chamberlain, President of the Irrigation Congress and governor of Oregon and later a U.S. Senator, questioned Harriman immediately at the Congress to explain “how many acres were included in the original grant, what the original grant provided as to the sale and how many acres have been sold in excess of the price fixed by that grant.” A Progressive reformer intent on using the Union Pacific-Southern Pacific as a political issue in Oregon, Chamberlain objected to the companies holding the lands and instead argued the lands (with timber and minerals) should revert to the Government–“the government can take care of the future generations.” Harriman replied that Oregon was a beautiful country but uninhabited and that railroads would eventually be extended into the state when it was more developed. Harriman and Chamberlain’s battle deserves further investigation, especially its meaning for the future of development, the West, and the role that federal land grants to railroads played in the region, but the Harriman policies regarding resource management on his system between 1901 and 1910 seem clear. Concerned about timber scarcity and rebuilding his railroads, Harriman intended to reorient the Union Pacific, Southern Pacific, and Illinois Central’s operations around a long-term strategy of planning, scientific management, and forestry conservation.