Land Speculation in the North West

T. J. TOBIN October 1 1906

Land Speculation in the North West

T. J. TOBIN October 1 1906

Land Speculation in the North West


One of the outstanding factors in the history of the development of the Canadian West is the specu ation in land, which has gone on there ever since the resources of the country were first made known. Whether or uot this .‘•peculation has been detrimental to the growth of the West is a debatable question. At any rate many men have made immense profits out of their dealings in North Wet land.

"LAND is the true basis of all wealth”—one may quickly

follow up and test the exactness of this reasoning. It is exact. He finds that the line of thought pursued carries him through an instructive series of conditions, exposing the fundamental principles of commercial life. As the nucleus from which evolves, directly or indirectly, all industrial activity, he pictures great areas under crop, covered with forest or pierced with the mine shaft. Tracing the products in their various courses, he examines the superstructure cf commerce, receiving its vitality from Mother Earth, the whole cooperating with a perfection directed by the best poweis of science.

The accepted application of the fact that land is the true basis of all wealth presupposes that the land must be cultivated. There, however, its utility as a medium between man and wealth does not cease, or, rather begin. Generally speaking, it has to pass through the speculative era before it embarks upon that commercial field where it produces according to the Divine intent, and spreads its benefits universally. The manipulation of land for grain without production—always undesirable, and often pernicious—may be studied with interest, and in it many phases will be found. This form of speculation has essentially a solidity not present in the majority of enterprises in which the goddess of fortune is asked for a large order of blessings on short notice, for as any agent of land

will tell you, “it can’t fiy away.” The fact that some mining properties did not have wings in early youth and a disposition to use them has been often deplored.

In land speculation, as Canadians experience it at the present time two fields stand out noticeably—the mining and western farm land. The effects of the former being to a certain degree, localized we may leave it to justify or disprove itself, and turn to the latter, with its broad national influences, and its existence backed by the most substantial conditions.

From what time does land speculation date? Did it find its inception with the downfall of feudalism, and the unpopularity of conquest by force of arms? It is a new form of conquest—that of the dollar.

Take the present day instance of Western Canada as an example. Not so very long ago our maps showed that immense tract, lying between the Great Lakes and the Rockies, as simP'lv Prince Rupert’s Land, and the popular idea saw little in it but a fur trading ground for the Hudson Bay Co. The awakening came and from a territory that was scarcely considered in the affairs of state has emerged 600,000 square miles of fertile country, the value of the soil of which is greater than all the mines in America, from Alaska to Mexico, taken together with the entire forest growth of Canada. It is a great natural heritage, and wealth and energy have been freely invested, with assurance of large returns.

The speculator was among the first on the ground when Canada’s new era opened. A few of his seeds of gold covered large territories and he has reaped many fine harvests, with prospects of many more. In the early days he stalked half-breed scrip with a few dollars, and, perhaps, a few bottles of whisky to make a bargain doubly attractive. Each piece off scrip entitled him to select 160 acres from the • Government lands anywhere within 600,000 square miles of the finest country that lies out of doers. He watched for the location of townsites along the new railways, and secured in many eases very valuable property, afterwards divided into town lots and sold at big prices.

Before the real merits of this new country had taken hold of the farmer from the States or Canada the speculators were on the ground buying areas of the choicest wheat land in the world—almost treeless, and ready for the plow—at $1 and $2 per acre. The country appeared so immense, and the .problem of settling it so stupendous that subsidies of millions of acres to the railways were not considered ample bonus to these enterprises, but were augmented by millions of dollars cash. Was such a proceeding an example of good judgment? Perhaps the end has justified the means.

The operations of the speculators did not embarrass the great influx of /settlers to any great extent while homesteads within reasonable distance of the existing railways and projected lines lasted. But the time came when it was discovered that the greater part of the desirably located land still unoccupied was in the hands of the railways and land companies organized to aet as their selling agents, independent land companies, syndicates and wealthy priv-

ate individuals. The settlement and cultivation of the homesteads naturally enhanced the value of the land around and the speculators found their assets multiplying without expending either money or effort. When the new settlers faced the problem of going back 40 or 50, and sometimes 100 miles from a railroad or town for free grant land, or buying at the speculators’ prices, the market ybegan to ripen for the gathering in of profits and the advance of prices.

, The greatest influx into our west has been from the United States. The thrifty Yankee from Minnesota, the Dakotas, and, eventually, many other states, found that he could sell out his property at from $75 to $100 per acre, go across the line into “Canadee,” buy ten acres for every one that he had at home, and better land, besides securing 160 acres free for each of his sons and himself. He moved quick and is getting rich fast. He has become a good Canadian and spends a good deal of his spare time endeavoring to convince his neighbor from Ontario that back-setting isn’t the best way to plow.

In 1905 the fever for speculation in western farm lands took hold of numbers of Ontario men with money. They bought generally in blocks of 5,000. 10,000 or 20,000 acres. The land they would personally select, and they could, therefore, guarantee its quality. Being men of standing they found no difficulty in retailing their holdings to friends going west to settle, at $9 and $10 per acre, where the representative of ,a land company would be liable to interest them in a proposition at a cheaper price. They considered the certainty of quality worth the difference. Most of this land was purchased at $6 and $6.50 per acre, with a small cash payment, the balance at 6 per cent., extending

over several j^ears. The interest liability was transferred to the retail purchasers, and the cash payment ;made sufficiently large to let the Speculators out, with a good piece of their profit besides. Then they reinvested.

This Spring there was a veritable rush of speculators, usually in syndicates of four and five. The wholesale price had jumped to $7 per acre at the beginning of the year, but the retail price had advanced proportionately. So great was the eagerness that large blocks were purchased ^without being seen, although there was a certain amount of protection afforded by twice the desired amount of land being reserved for selection. The price of option up to June 1 was 50 cents per acre, to be forfeited if ,the land did not suit, and the intending purchaser did not wish to go further with the deal. The chance of getting poor land was small. The term “land office business” was exemplified in the fullest degree. Before long one company controlling a very large territory had to announce that its entire holdings were tied up for selection. This gave competitors who still had land for sale a splendid opportunity, and the law of supply and demand operating at once sent the wholesale price to $7.50, then to $8 and $8.50, and finally even to $9 and $10 for first-class land in desirable locations. The retail price ranges generally from $10 to $15 per acre.

The land referred to above is all raw prairie untouched by the plow. Improved land is another matter. In some districts it is almost impossible to buy a good farm for anything like g. reasonable figure. The owners are ,making money and generally do not care to sell. On the contrary, they are putting their spare cash into

more land as close by as possible. And this has given rise to a condition worth dwelling upon.

A settler going into the west usually puts all of his money—with the exception of enough to make the way clear to his first harvest—into land. He knows that it will never be so ,cheap again, and that this is the last great west. Very often he puts all he has into his farm and relies on his Credit to see him through for the necessities of life. Where he shows honest endeavor the merchants are willing to keep him on their books until he gets his first crop. But here is the drawback to this system: the proceeds of his wheat received, the settler gets the fever for speculation and he prolongs his credit. The volume of business on paper has become so great that the merchants and and wholesalers have had to tighten up somewhat, with the result that the west is getting down to a saner pace than heretofore existed

To go through the west is to get the land fever. It seems to be in the air, and one breathes in the seductive exhiliaration of dollars won by the rapid transit route. Land is being turned over rapidly, and real estate agents are a multitude. They are everywhere and many have made comfortable fortunes. The men who devote their whole time to this work have competitors in every citizen who knows where there is a piece of land to be bought handy, and who can pick up a purchaser. One dollar an ,acre is the standard rate of commission on retail sales, or $6.40 on every section. The attractiveness of ,the proposition may be guaged when it is known that the majority of sales are of 320 and 640 acres. Even the women are not exempt from the fever. One lady from Minnesota organized parties of homeseekers last

Summer and brought them to land for which she had an agency. Her commissions netted her $10,000.

There is money in it for the speculator and money in it for the farmer who buys from him. Both should be happy. The price is climbing, but it will have to go much higher before speculation will be discouraged. It is predicted that all good land will double in value within the next ten years. Likely it will. Inferior land in Ontario is worth more than that. One railway company seems resolved on waiting for better terms, for, last Spring, it’s holdings were put at a figure somewhat above the market. There was an outcry that this was done to enhance the value of the company’s stock and the Government of one of the western provinces was asiked to protest.

Some idea of the degree to which the speculative fever is contagious, may be abstracted from the fact that complaint was made at a church assembly recently that some western ministers neglected their pastoral duties to dable in land.

The most rapid play in the western speculative field has, of course, centred in town and city lots, and in some cases the need of bringing strong influences to bear on the market, with a view to steadying prices, is being felt. Abnormal inflation of values does not give a young municipality the chance to attract the population that it should have. Many fortunes have been made as the result of purchases made before the great influx of settlers started. In Regina, ten years ago, a young man had an opportunity to buy two lots at $8 apiece. He somewhat Reluctantly secured one of them. He sold it a short time ago for $20,000. The writer is informed that a quartersection on the outskirts of Calgary,

bought for $23,000 last Winter, was divided into building lots and sold at a profit of about $60,000. In Edmonton the other day a fifty-foot lot in central location realized $40,000 on $800. This is the highest figure that has yet been reached.

Let us return to the question of farm lands. Hus speculation been a drawback to the west? Undoubtedly it has. Large tracts have been tied up in the best localities at times when settlers were clamoring for entry, and were willing to pay what they considered a fair price. The speculator knew he had a sure thing, and he hung on till he got his figure. Large blocks of land are held at the present time in just this way. The injustice to the settler is apparent, but who can blame the man who had foresight enough to get on the ground early, and back up his faith with dollars ?

Who were the original owners of the land? The people of Canada. They intrusted this great heritage to the Government. Now, admitting that the building of railways was worth the enormous land subsidy it received, is there anything to be said in condemnation of the governmental policy that has been pursued since? A few months ago land was sold to a large company at less than the market price by a good deal, and will, no doubt, be turned over within a short time. This company’s profits will be a burden that numbers of settlers will divide among them, and find very heavy, though they be spread over five or six years. Perhaps other such deals have been put through.

“Land graft” has an ugly sound, principally because of the application that it has to the peopling of the American west, where one man is known to have acquired millions of acres, chiefly by fraud. No parallel

case is to be found in our Great West, but it is said, nevertheless, that choice plums have been dropped into hands that were able to pass them on at an immense profit. Such transactions were dishonest, and it is hoped that someone with the requisite proof will have the courage to expose them, regardless of what heads may fall.

In the meantime the Great West is prospering, most of the settlers

own their land, ha\e money in the bank, and look forward to another big crop this year. The land of No. 1 hard wheat, where the climate makes it almost a crime to die of anything but old age, is filling up fast, but has still lots of room. It is the count-, y where nearly every man has an actual stake in the soil, and follows steadfastly the doctrine that “land is the true basis of all wealth.”