Essential Facts
- The Yazoo Land Scandal started in 1794 and was eventually resolved in 1814.
- Georgia politicians sought to sell the state’s “Western Lands” — or “Yazoo Lands” — before they were asked to cede them to the United States.
- Georgia also needed money to fund its treasury, to help pay veterans who fought in the American Revolutionary War.
- James Gunn, one of Georgia’s U.S. Senators, helped organize a scheme to sell land to four companies at a low cost.
- Politicians were offered bribes — stock options in the companies and cash — in return for their votes. All but one member of the Georgia Legislature accepted a bribe and voted for the Yazoo Land Act of 1795.
- The companies started selling parcels and made a significant profit for their investors.
- When the scheme was uncovered, the people of Georgia were outraged and voted most of the politicians involved in the scheme out of office.
- In 1796, the new legislature passed the Yazoo Rescinding Act, which overturned the Yazoo Land Act.
- This initiated over a decade of legal battles eventually settled by the landmark Supreme Court Case, Fletcher v. Peck in 1810. The Court ruled the Yazoo Rescinding Act unconstitutional, validating the earlier land sales.
- The scandal contributed to the formation of the Mississippi Territory, Indian Removal, westward expansion of slavery, and cotton culture in the Deep South.
- In 1814, the event ended when Congress established a fund to refund money lost by people who bought Yazoo Lands.
Significance
The Yazoo Land Scandal is an important event in American History because it led to the formation of the Mississippi Territory, the Compact of 1802, and the Georgia Cession. The Georgia Cession expanded the Mississippi Territory and eventually contributed to the removal of Native American Indians living in the region to territory west of the Mississippi River. The event also led to the Supreme Court Case Fletcher v. Peck. The Court’s decision established the precedent that it had the power to rule a state law unconstitutional.
Yazoo Land Scandal History and Overview
Land Speculation and Land Companies
Land Speculation is an investment strategy involving buying and selling real estate for profit.
In America’s early history, Land Companies were organized to speculate — buy large tracts of land, divide them into smaller parcels, and resell the smaller parcels. Parcels were sold to individuals and other companies.
Examples of companies during the Colonial Era are:
- The Ohio Company of Virginia purchased territory in the Ohio Valley Region.
- Ethan Allen and his brothers formed the Onion River Company and speculated in the New Hampshire Grants.
Georgia’s Western Lands
Following the American Revolutionary War, Georgia took control of territory west of the Chattahoochee River, along the Yazoo River. The region was called the “Yazoo Lands” because of the river.
The Yazoo River meets the Mississippi River near present-day Vicksburg, Mississippi.
Although most states ceded their Western Lands to Congress, Georgia did not. However, the Yazoo Lands were far west of Georgia’s largest cities and towns, stretching across present-day Alabama and Mississippi.
The Cherokee, Choctaw, Chickasaw, and Creek occupied the region. These people also claimed ownership but did not have legal titles. The Indians were never seriously considered partners in any agreements or transactions. They were seen as an impediment to progress and every scheme to settle the area identified Georgia or the United States as the owner and provided money to convince the Indians to give up their claims.
Georgia tried to establish counties in the Yazoo Region for white settlers several times but failed. However, these attempts led directly to the Yazoo Scandal.
- 1784 — Georgia tried to organize a county in the Muscle Shoals area of East Tennessee. However, this conflicted with the short-lived State of Franklin (see John Sevier).
- 1785 — Bourbon County was organized. The east boundary was the Yazoo River, and the western boundary was the Mississippi River. Due to conflicting claims with Spain, Congress forced Georgia to dissolve the county in 1788. Spain’s claims were resolved by the Treaty of San Lorenzo (1795).
- 1789 — A group known as the “Combined Society” was organized and included three companies. They agreed to buy 20 million acres for $207,000, but the deal fell apart over the terms of payment.
Conflicts with Northwest Indians
- In 1790 and 1791, President George Washington sent U.S. military forces to the Northwest Territory to engage Indians. The Indians prevailed, including victory at the Battle of the Wabash (November 4, 1791).
- Three years later, in 1794, General Anthony Wayne led the new army — Legion of the United States — to victory and forced the Indians to agree to the Treaty of Greenville (1795).
Treaty of New York (1790)
- In the South, the Federal Government worked to maintain peaceful, friendly relations with the Indians through the Fur Trade. The Cherokees, Choctaws, and Chickasaws were open to an arrangement that contributed to the establishment of the Fur Trade Factory System in 1796.
- However, the Creek Nation was apprehensive due to conflicts with Georgia over old treaties that ceded Creek territory to the state.
- In 1790, Washington invited Creek leaders, including Alexander McGillivray, to meet with him.
- They agreed to the Treaty of New York that:
- Returned some land to the Creeks.
- Provided annual payments — called “annuities” — for the disputed land that was not returned to the Creeks.
- Established a “plan of civilization” where the government provided the Creeks and Seminoles with animals and tools they needed to take up agriculture.
- The Indians agreed to accept protection from the United States.
- Despite this treaty, Americans continued to push westward in the South.
Yazoo Land Act of 1795
- After the United States Constitution was ratified, some Georgia officials believed the Federal Government would eventually claim the Yazoo Lands.
- Georgia officials decided to try to sell them before they were ceded to the government.
- An agreement was reached with four companies in 1794:
- Georgia Company
- Georgia-Mississippi Company
- Tennessee Company
- Upper Mississippi Company
- One of Georgia’s U.S. Senators, James Gunn, helped organize the deal.
- The Yazoo Region was divided into four parcels, with one parcel sold to each company.
- The companies agreed to buy 35 million acres of land for $500,000 — roughly 1.4 cents per acre.
- The payment on the four parcels was due by November 1, 1795.
- It was roughly two-thirds of Georgia’s territory west of the Chattahoochee River.
- The Georgia Legislature voted in favor of the Act.
- Gunn helped orchestrate bribes to legislators, and nearly everyone who voted for the Act was guilty of accepting a bribe from the companies, in the form of stock in the companies or cash.
- Governor George Mathews initially vetoed the bill over concerns it was illegal.
- Supporters convinced him it would help fund the Georgia Treasury and allow the state to pay war veterans.
- Mathews signed the act on January 4, 1795.
Chisholm v. Georgia and the 11th Amendment
- In 1792, Alexander Chisholm sued Georgia, seeking reimbursement for money owed to South Carolina merchant Robert Farquhar.
- During the American Revolutionary War, American forces seized a shipment of Farquhar’s goods. Georgia was ordered to reimburse him for the goods but failed to do so before he died in 1784.
- Chisholm was the executor of Farquhar’s estate and filed a lawsuit directly with the United States Supreme Court.
- He hired Edmund Randolph, Attorney General of the United States, to argue his case.
- Georgia argued it could not be sued in Federal Court without its consent and did not believe the Supreme Court had jurisdiction.
- In February 1793, the Court, led by Chief Justice John Jay, ruled in favor of Chisholm.
- The ruling was controversial. Critics argued it undermined the sovereignty of states.
- Chief Justice Jay argued states did not have individual sovereignty, because they were part of the Union under the Constitution.
- Congress responded to this with the 11th Amendment (1795), which prohibits citizens in one state from suing another state in Federal Court.
- This Amendment is what kept New England investors from suing Georgia over the Yazoo Land Scandal.
Yazoo Land Fraud Exposed
- Passage of the Yazoo Land Act and the corrupt deals are known as the “Yazoo Land Fraud.”
- It was the largest land fraud scheme of the Federalist Era.
- Citizens of Georgia — and a handful of politicians — were outraged when they learned of the deal.
- There were legal concerns over whether Georgia had the right to make the sale.
- James Gunn was burned in effigy as part of the public outrage and street demonstrations.
Yazooists and Anti-Yazooists
- Factions emerged that supported the act — known as “Yazooists” — and those who opposed it — “Anti-Yazooists.”
- The Anti-Yazooists accused politicians of accepting bribes in return for voting in favor of the Yazoo Act.
- In the next election, most of the Georgia politicians who accepted bribes were voted out of office.
- Meanwhile, frenzied speculation started as the companies sold, primarily to investors in New England.
Yazoo Land Sold to Northern Speculators
- The act was valid for roughly a year.
- During this time, the four companies had already sold most, if not all, of the land.
- As the popularity of the region grew, so did the price per acre.
- The Georgia-Mississippi Company sold 11 million acres to the New England Mississippi Land Company (NEM Land Company) for $1,138,000.
- John Peck was a significant investor and a principal in the NEM Land Company.
- Peck bought parcels in his name and as a member of the NEM Land Company.
- This sale was finalized the same day the Georgia Legislature passed the Yazoo Rescinding Act.
- The Georgia-Mississippi Company made roughly a 650% profit in just 13 months.
Yazoo Rescinding Act
- Georgia’s other U.S. Senator, James Jackson, refused to accept the bribe offered to him.
- Jackson returned to Georgia to undo Gunn’s deal.
- He led a successful legal campaign to overturn the Yazoo Land Act and expunge it from the state’s records.
- On February 13, 1796, Governor Jared Irwin signed the Yazoo Rescinding Act:
- The original Yazoo Land Sale to the four companies was nullified.
- Georgia revoked all contracts related to the Yazoo Land Act.
- Georgia reclaimed the Yazoo Land Tracts.
- A fund was established to reimburse individuals and companies that had purchased land.
- The state had the records of the Yazoo Land Act burned in public, except for one copy, which was sent to President George Washington.
- An announcement was ordered to be published in newspapers nationwide.
- The revocation of the Yazoo Land Act created a significant legal situation.
Federalists vs. Democratic-Republicans
- Yazooists (Federalists) and Anti-Yazooists (Democratic-Republicans) aligned largely on party lines.
- James Gunn was a Federalist, while James Jackson was a Democratic-Republican.
- Jackson used the controversy against the Federalists, many of whom were involved in the Yazoo Land Fraud.
- The Democratic-Republicans also stalled efforts to turn over Georgia’s Western Lands to the Federal Government, so the investors could not access them.
The Yazoo Claim Fund
- Even though Georgia claimed control of the Yazoo Land Tracts, some investors still argued their titles were valid.
- Many refused to apply for reimbursement from the fund because they lost their claim if they accepted the money.
- They hoped the Federal Government or the courts would validate their claims.
- The presence of Indians in the region created difficulties.
- In the court proceedings that followed, investors in the NEM Land Company insisted they did not know about the repeal of the Yazoo Land Act.
- Anti-Yazooists argued they were not ignorant because the announcement had been printed in the papers.
Formation of the Mississippi Territory
During the ongoing controversy over the region, arguments were made the territory already belonged to the United States and not Georgia. This was based on the idea it was part of the Proclamation of 1763, when Georgia was a colony, and transferred to the Confederation Congress in the Treaty of Paris (1783).
- The Federal Government took action in response to the controversy.
- On April 7, 1798, President John Adams signed legislation establishing the Mississippi Territory.
- It included territory acquired from Spain in Pickney’s Treaty of San Lorenzo and a portion of the Yazoo Lands. Today, it makes up the lower portions of Alabama and Mississippi.
- Congress was concerned about the settlement due to potential conflicts with the Indians.
- The legislation authorized Congress to start negotiations with Georgia to acquire the land between Georgia and the Mississippi River, north of the Mississippi Territory and south of Tennessee.
- The Mississippi Territory was organized like the Northwest Territory. However, slavery was permitted.
Settlement of the Yazoo Land Tracts Blocked
- When the Mississippi Territory was created, the NEM Land Company and others still tried to colonize their Yazoo Lands.
- However, these plans were blocked by Jackson and the Democratic-Republicans.
- By 1800, the land speculators had decided to abandon colonization plans and sought to clarify the legal standing of their titles through the courts.
Compact of 1802 and the Georgia Cession
- James Jackson helped organize the Compact of 1802 to simplify the legal issues surrounding the Yazoo Region.
- The Compact transferred the Yazoo Land Tracts to the Federal Government.
- The government paid $1.25 million for the land.
- The government also promised to eliminate the land claims of the Indians peacefully.
- Known as the “Georgia Cession,” the land was eventually added to the Mississippi Territory.
- As part of the agreement, slavery was expanded to the Georgia Cession.
Congressional Debate Over Yazoo Claims
- The debate over the Yazoo Land Tracts continued.
- The NEM Land Company investors and Yazooists lobbied Congress.
- The investors wanted their money back, while the Yazooists wanted the Yazoo Rescinding Act overturned.
- A prominent Yazooist was Joseph Story, who became an Associate Justice on the United States Supreme Court.
- Anti-Yazooists continued to reject the claims due to the corruption that led to the Yazoo Land Act.
- John Randolph of Virginia and George Troup of Georgia were leading opponents of refunding the investors. Both were Democratic-Republicans and wanted the Yazoo Rescinding Act upheld.
- Troup argued that if Congress ignored the Yazoo Rescinding Act, it would undermine Georgia’s authority. In doing this, Troup made it a States’ Rights issue.
- After Congress failed to reimburse the NEM Land Company, the investors turned to the courts.
Yazoo Lands and Fletcher v. Peck
- The NEM Land Company orchestrated a lawsuit to overturn the Yazoo Rescinding Act, validate the original purchase, and force Congress to refund investors.
- On May 14, 1803, Peck sold 15,000 acres of his land to Robert Fletcher of New Hampshire for $3,000.
- Within four days, Fletcher sued Peck for selling him land without a valid title.
- Fletcher v. Peck was first heard in the U.S. Circuit Court in Massachusetts in 1806. The Court ruled in favor of Peck.
- Fletcher’s lawyers filed an appeal with the Supreme Court.
- The Court heard the case in 1809, but there was a technicality, and it was heard again in 1810.
- The Court ruled the Yazoo Rescinding Act was an unconstitutional violation of the Contracts Clause of the Constitution, which is found in Article I, Section 10, Clause 1.
- The Contract Clause says, “No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”
- The key point is “No State shall…pass any…Law impairing the Obligation of Contracts.”
Impact of Fletcher v. Peck on the Yazoo Lands
- Despite the ruling, Peck and other investors were still denied reimbursement from Congress.
- Democratic-Republicans continued to block compensation bills in the House of Representatives.
- With the War of 1812 on the horizon, there were changes in the Democratic-Republican Party.
- Opinions changed, and members felt it was reasonable to reimburse the investors — and it was in the best interest of the nation.
- In 1814, the Federal Government established a fund of $5 million to reimburse investors who lost money in the Yazoo Land Fraud.
Key People Involved in the Scandal
Thomas Carr — Carr (1742–1820) was a veteran of the American Revolutionary War and served in the 15th Virginia Militia. Born in Virginia, he was related to Dabney Carr, Thomas Jefferson’s brother-in-law and one of his closest friends. Carr fought in battles in South Carolina and Georgia and was wounded at least once. He settled in Georgia and became a speculator. In 1795, he was a member of the Georgia Legislature and a leading member of the Tennessee Yazaoo Company. In 1796, Carr established a law practice in Alexandria. He ran for various political offices but was defeated due to his involvement in the scandal. Carr’s papers have been digitized by the Digital Library of Georgia and include documents related to the purchase.
Zachariah Cox — Cox (1765–1838) was a leading member of the Tennessee Company.
James Gunn — Gunn (1753–1801) was one of the leading members of the Georgia Company. He represented Georgia in the Continental Congress and the United States Senate. He was a veteran of the American Revolutionary War, served in the 1st Continental Dragoons, and was involved in a dispute with General Nathanael Greene. After the war, both men moved to Georgia. Their rivalry continued. Gunn challenged Greene to a duel, but Greene refused and was supported by George Washington. In 1789, Georgia elected him as one of its first Senators. Cries of bribery followed Gunn for the rest of his career.
Wade Hampton — Hampton (1750–1835) was involved in two of the companies. Hampton was a veteran of the American Revolutionary War, represented South Carolina in the U.S. House of Representatives, and served in the War of 1812. When he died, he was believed to be the wealthiest planter in America.
Patrick Henry — Henry (1736–1799) was a Founding Father and one of the leading supporters of the Patriot Cause. He was involved with the Virginia Yazoo Company during the failed 1789 purchase.
Jared Irwin — Irwin (1750–1818), served two terms as Governor of Georgia. A veteran of the American Revolutionary War, he participated in the Georgia Constitutional Convention in 1789. Irwin publicly burned a copy of the Yazoo Land Act after it was rescinded.
James Jackson — Jackson (1757–1806) was a native of England. He emigrated to Georgia in 1772, supported the Patriot Cause, and fought in the American Revolutionary War. He fought the British in Savannah and the Battle of Cowpens (January 17, 1781). Jackson was elected to the U.S. House of Representatives, where he opposed Federalist politics. In 1793, he was elected to represent Georgia in the U.S. Senate. Jackson was elected Governor in 1798.
James Wilson — Wilson (1742–1798) was a Founding Father and an Associate Justice of the United States Supreme Court. Wilson was an investor in the Georgia Company.
Yazoo Land Scandal APUSH
The Yazoo Land Scandal is part of the following units and chapters in the AP US History curriculum:
APUSH Unit 4: 1800–1848
- Topic 4.2 — The Rise of Political Parties and the Era of Jefferson
- Topic 4.3 — Politics and Regional Interests
