The History of a Sample Michigan Land Grant, 1873-1920

Most people are aware that many nineteenth-century railroads in America received grants of public domain as an aid to their construction. In Michigan, a little over 5.5 million acres were turned over to various freight and passenger lines in return for their completion of tracks between certain points, or along specific routes. This donated real estate amounted to about 15% of the state's total land area.¹

The idea was that qualifying railroads would sell bonds or take out loans to build their lines, using the promised land grants as collateral. Knowing that these forthcoming properties had value made cautious investors more comfortable entrusting their money in what otherwise might be a risky proposition. Once the benefitting firm had finished construction and received its designated tracts from the state or federal governments, it was free to start selling its earthy present and use the income to pay its obligations.²

Nearly every railroad receiving a grant created a land department to sell its real estate holdings. Promotional brochures were published extoling the virtues of the property, often accompanied by maps showing at least in broad terms the locations of the various parcels. In a few cases, demonstration farms were established by some of the recipient firms as a way of showing the productivity of their acquired territory.³

Histories of Michigan railroad firms mention that the companies received gifts of real estate in return for laying ribbons of steel through undeveloped areas of the state, but nowhere is there a detailed study of how the land was disposed of by the beneficiaries. The aim of this article is to follow in one case the sale of a Michigan railroad land grant from beginning to end.⁴ About a dozen corporations were rewarded with tracts of terra firma for constructing their lines in Michigan, a slight majority of them being roads traversing the rugged Upper Peninsula.⁵ For the purpose of this intellectual exercise, attention will be focused on the freehold largess received by the Marquette, Houghton & Ontonagon Railroad Company (MH&O) from the United States government.

Brief histories of the MH&O have been written, and there is no need to repeat them here.⁶ Suffice it to say that the railroad's intent was to build a line to connect the points mentioned in its name. For constructing the stretch between Marquette and L'Anse, the company received from the federal government a land grant totaling just a fraction less than 462,244 acres, nearly all of it confined to odd-numbered sections in Baraga and Marquette counties.⁷

To build its line, the MH&O had borrowed millions of dollars. To pay down this debt, the company almost immediately tried to sell some of its newly acquired property. This effort did not go well, as the land grant was received just as the Panic of 1873 began. With this economic downturn lasting more than five years, the real estate market was depressed for an extended period of time. The difficulties encountered by the railroad in liquidating its domain can be seen in the following statistics:⁸

Land Sales by the Marquette, Houghton & Ontonagon Railroad

While the nation's poor financial situation certainly had an adverse effect on the ability of the MH&O to sell its real estate holdings, other factors were also at play. In a report about its affairs in 1880, the firm admitted it had not made an effort "to encourage exploration of [its holdings] for minerals." It further disclosed that "only now the lumbermen of the lower peninsula are beginning to look to this northwestern country for new operations," thus explaining why sales of timberland had been slow. And, with a final note, the publication observed that "settlers are just beginning to push northward of Wisconsin in quest of [acreage for] farms."¹⁰

The lands owned by the MH&O had good future prospects, but the corporation's need for money would not allow it to play a waiting game. If only 100...