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Veto Message

June 15, 1866

To the Senate of the United States:

The bill entitled "An act to enable the New York and Montana Iron Mining and Manufacturing Company to purchase a certain amount of the public lands not now in market" is herewith returned to the Senate, in which it originated, with the objections which induce me to withhold my approval.

By the terms of this bill the New York and Montana Iron Mining and Manufacturing Company are authorized, at any time within one year after the date of approval, preempt two tracts of land in the Territory of Montana, not exceeding in the aggregate twenty sections, and not included in any Indian reservation or in any Government reservation for military or other purposes. Three of these sections may be selected from lands containing iron ore and coal, and the remainder from timber lands lying near thereto. These selections are to be made under regulations from the Secretary of the Interior and be subject to his approval. The company, on the selection of the lands, may acquire immediate possession by permanently marking their boundaries and publishing description thereof in any two newspapers of general circulation in the Territory of Montana. Patents are to be issued on the performance, within two years, of the following conditions:

First. The lands to be surveyed at the expense of the company, and each tract to be "as nearly in a square form as may be practicable."

Second. The company to furnish evidence satisfactory to the Secretary of the Interior that they have erected and have in operation in one or more places on said lands iron works capable of manufacturing at least 1,500 tons of iron per annum.

Third. The company to have paid for said lands the minimum price of $1.25 per acre.

It is also provided that the "patents shall convey no title to any mineral lands except iron and coal, or to any lands held by right of possession, or by any other title, except Indian title , valid at the time of the selection of the said lands." The company are to have the privileges of ordinary preemptors and be subject to the same restrictions as such preemptors with reference to wood and timber on the lands, with the exception of so much as may be necessarily used in the erection of buildings and in the legitimate business of manufacturing iron.

The parties upon whom these privileges are conferred are designated in the bill as "The New York and Montana Iron Mining and Manufacturing Company." Their names and residence not being disclosed, it must be inferred that this company is a corporation, which, under color of corporate powers derived from some State or Territorial legislative authority, proposes to carry on the business of mining and manufacturing iron, and to accomplish these ends seeks this grant of public land in Montana. Two questions thus arise, viz, whether the privileges the bill would confer should be granted to any person or persons, and, secondly, whether, if unobjectionable in other respects, they should be conferred upon a corporation.

The public domain is a national trust, set apart and held for the general welfare upon principles of equal justice, and not to be bestowed as a special privilege upon a favored class. The proper rules for the disposal of public land have from the earliest period been the subject of earnest inquiry, grave discussion, and deliberate judgment. The purpose of direct revenue was the first object, and this was attained by public sale to the highest bidder, and subsequently by the right of private purchase at a fixed minimum. It was soon discovered that the surest and most speedy means of promoting the wealth and prosperity of the country was by encouraging actual settlement and occupation, and hence a system of preemption rights, resulting most beneficially, in all the Western Territories. By progressive steps it has advanced to the homestead principle, securing to every head of a family, widow, and single man 21 years of age and to every soldier who has borne arms for his country a landed estate sufficient, with industry, for the purpose of independent support.

Without tracing the system of preemption laws through the several stages, it is sufficient to observe that it rests upon certain just and plain principles, firmly established in all our legislation. The object of these laws is to encourage the expansion of population and the development of agricultural interests, and hence they have been invariably restricted to settlers. Actual residence and cultivation are made indispensable conditions; and, to guard the privilege from abuses of speculation or monopoly, the law is rigid as to the mode of establishing claims by adequate testimony, with penalties for perjury. Mining, trading, or any pursuit other than culture of the soil is interdicted, mineral lands being expressly excluded from preemption privileges, excepting those containing coal, which, in quantities not exceeding 160 acres, are restricted to individuals in actual possession and commerce, with an enhanced minimum of $20 per acre.

For a quarter of a century the quantity of land subject to agricultural preemption has been limited so as not to exceed a quarter section, or 160 acres; and, still further to guard against monopoly, the privilege of preemption is not allowed to any person who owns 320 acres of land in any State or Territory of the United States, nor is any person entitled to more than one preemptive right, nor is it extended to lands to which the Indian usufruct has not been extinguished. To restrict the privilege within reasonable limits, credit to the ordinary preemptor on offered land is not extended beyond twelve months, within which time the minimum price must be paid. Where the settlement is upon unoffered territory, the time for payment is limited to the day of public offering designated by proclamation of the President; while, to prevent depreciation of the land by waste or destruction of what may constitute its value, penal enactments have been made for the punishment of persons depredating upon public timber.

Now, supposing the New York and Montana Iron Mining and Manufacturing Company to be entitled to all the preemption rights which it has been found just and expedient to bestow upon natural persons, it will be seen that the privileges conferred by the bill in question are in direct conflict with every principle heretofore observed in respect to the disposal of the public lands.

The bill confers preemption right to mineral lands , which, excepting coal lands, at an enhanced minimum, have heretofore, as a general principle, been carefully excluded from preemption. The object of the company is not to cultivate the soil or to promote agriculture, but is for the sole purpose of mining and manufacturing iron. The company is not limited. like ordinary preemptors, to one preemptive claim of a quarter section, but may preempt two bodies of land, amounting in the aggregate to twenty sections, containing 12,800 acres, or eighty ordinary individual preemption rights. The timber is not protected, but, on the contrary, is devoted to speedy destruction; for even before the consummation of title the company are allowed to consume whatever may be necessary in the erection of buildings and the business of manufacturing iron. For these special privileges, in contravention of the land policy of so many years, the company are required to pay only the minimum price of $1.25 per acre, or one-sixteenth of the established minimum, and are granted a credit of two years, or twice the time allowed ordinary preemptors on offered lands.

Nor is this all. The preemption right in question covers three sections of land containing iron ore and coal. The act passed on the 1st of July, 1864, made it lawful for the President to cause tracts embracing coal beds or coal fields to be offered at public sale in suitable legal subdivisions to the highest bidder, after public notice of not less than three months, at a minimum price of $20 per acre, and any lands not thus disposed of were thereafter to be liable to private entry at said minimum. By the act of March 3, 1865, the right of preemption to coal lands is granted to any citizen of the United States who at that date was engaged in the business of coal mining on the public domain for purposes of commerce; and he is authorized to enter, according to legal subdivisions, at the minimum price of $20 per acre, a quantity of land not exceeding 160 acres, to embrace his improvements and mining premises. Under these acts the minimum price of three sections of coal lands would be thirty-eight thousand four hundred dollars ($38,400).

By the bill now in question these sections containing coal and iron are bestowed on this company at the nominal price of $1.25 per acre, or two thousand four hundred dollars ($2,400), thus making a gratuity or gift to the New York and Montana Iron Mining and Manufacturing Company of thirty-six thousand dollars ($36,000).

On what ground can such a gratuity to this company be justified, especially at a time when the burdens of taxation bear so heavily upon all classes of the people?

Less than two years ago it appears to have been the deliberate judgment of Congress that tracts of land containing coal beds or coal fields should be sold, after three months' notice, to the bidder at public auction who would give the highest price over $20 per acre, and that a citizen engaged in the business of actual coal mining on the public domain should only secure a tract of 160 acres, at private entry, upon payment of $20 per acre and formal and satisfactory proof that he in all respects came within the requirements of the statute. It can not be that the coal fields of Montana have depreciated nearly twentyfold in value since July, 1864. So complete a revolution in the land policy as is manifested by this act can only be ascribed, therefore, to an inadvertence, which Congress will, I trust, promptly correct.

Believing that the preemption policy--so deliberately adopted, so long practiced, so carefully guarded with a view to the disposal of the public lands in a manner that would promote the population and prosperity of the country--should not be perverted to the purposes contemplated by this bill, I would be constrained to withhold my sanction even if this company were, as natural persons, entitled to the privileges of ordinary. preemptors; for if a corporation, as the name and the absence of any designation of individuals would denote, the measure before me is liable to another fatal objection.

Why should incorporated companies have the privileges of individual preemptors? What principle of justice requires such a policy? What motive of public welfare can fail to condemn it? Lands held by corporations were regarded by ancient laws as held in mortmain, or by "dead hand," and from the time of Magna Charta corporations required the royal license to hold land, because such holding was regarded as in derogation of public policy and common right. Preemption is itself a special privilege, only authorized by its supposed public benefit in promoting the settlement and cultivation of vacant territory and in rewarding the enterprise of the persons upon whom the privilege is bestowed. "Preemption rights," as declared by the Supreme Court of the United States, "are founded in an enlightened public policy, rendered necessary by the enterprise of our citizens. The adventurous pioneer, who is found in advance of our settlements, encounters many hardships, and not unfrequently dangers from savage incursions. He is generally poor, and it is fit that his enterprise should be rewarded by the privilege of purchasing the spot selected by him, not to exceed 160 acres." It may be said that this company, before they obtain a patent, must prove that within two years they "have erected and have in operation in one or more places on the said lands iron works with a capacity for manufacturing at least 1,500 tons of iron per annum." On the other hand, they are to have possession for two years of more than 12,000 acres of the choice land of the Territory, of which nearly 2,000 acres are to contain iron ore and coal and over 10,000 acres to be of timber land selected by themselves. They will thus have the first and exclusive choice. In fact, they are the only parties who at this time would have any privilege whatever in the way of obtaining titles in that Territory. Inasmuch as Montana has not yet been organized into a land district, the general preemption laws for the benefit of individual settlers have not yet been extended to that country, nor has a single acre of public land in the Territory yet been surveyed. With such exclusive and extraordinary privileges, how many companies would be willing to undertake furnaces that would produce 5 tons per day in much less time than two years?

It is plain the pretended consideration on which the patent is to issue bears no just proportion to that of the ordinary preemptor, and that this bill is but the precursor of a system of land distribution to a privileged class, unequal, unjust, and which ought not to receive the sanction of the General Government. Many thousand pioneers have turned their steps to the Western Territories, seeking, with their wives and children, homesteads to be acquired by sturdy industry under the preemption laws. On their arrival they should not find the timbered lands and the tracts containing iron ore and coal already surveyed and claimed by corporate companies, favored by the special legislation of Congress, and with boundaries fixed even in advance of the public surveys--a departure from the salutary provision requiring a settler upon unsurveyed lands to limit the boundaries of his claim to the lines of the public survey after they shall have been established. He receives a title only to a legal subdivision, including his residence and improvements. The survey of the company may not accord with that which will hereafter be made by the Government, while the patent that issues will be descriptive of and confer a title to the tract as surveyed by the company.

I am aware of no precedent for granting such exclusive rights to a manufacturing company for a nominal consideration. Congress have made concessions to railway companies of alternate sections within given limits of the lines of their roads. This policy originated in the belief that the facilities afforded by reaching the parts of the country remote from the great centers of population would expedite the settlement and sale of the public domain. These incidental advantages were secured without pecuniary loss to the Government, by reason of the enhanced value of the reserved sections, which are held at the double minimum. Mining and manufacturing companies, however, have always been distinguished from public-improvement corporations. The former are, in law and in fact, only private associations for trade and business on individual account and for personal benefit. Admitting the proposition that railroad grants can stand on sound principle, it is plain that such can not be the case with concessions to companies like that contemplated by this measure. In view of the strong temptation to monopolize the public lands, with the pernicious results, it would seem at least of doubtful expediency to lift corporations above all competition with actual settlers by authorizing them to become purchasers of public lands in the Territories for any purpose, and particularly when clothed with the special benefits of this bill. For myself, I am convinced that the privileges of ordinary preemptors ought not to be extended to incorporated companies.

A third objection may be mentioned, as it exemplifies the spirit in which special privileges are sought by incorporated companies.

Land subject to Indian occupancy has always been scrupulously guarded by law from preemption settlement or encroachment under any pretext until the Indian title should be extinguished. In the fourth section of this act, however, lands held by "Indian title" are excepted from prohibition against the patent to be issued to the New York and Montana Iron Mining and Manufacturing Company.

The bill provides that the patent "shall convey no title to any mineral lands except iron and coal , or to any lands held by right of possession, or by any other title, except Indian title , valid at the time of the selection of the said lands." It will be seen that by the first section lands in "Indian reservations" are excluded from individual preemption right, but by the fourth section the patent may cover any Indian title except a reservation ; so that no matter what may be the nature of the Indian title, unless it be in a reservation, it is unprotected from the privilege conceded by this bill.

Without further pursuing the subject, I return the bill to the Senate without my signature, and with the following as prominent objections to its becoming a law:

First. That it gives to the New York and Montana Iron Mining and Manufacturing Company preemption privileges to iron and coal lands on a large scale and at the ordinary minimum--a privilege denied to ordinary preemptors. It bestows upon the company large tracts of coal lands at one-sixteenth of the minimum price required from ordinary preemptors. It also relieves the company from restrictions imposed upon ordinary preemptors in respect to limber lands; allows double the time for payment granted to preemptors on offered lands; and these privileges are for purposes not heretofore authorized by the preemption laws, but for trade and manufacturing.

Second. Preemption rights on such a scale to private corporations are unequal and hostile to the policy and principles which sanction preemption laws.

Third. The bill allows this company to take possession of land, use it, and acquire a patent thereto before the Indian title is extinguished, and thus violates the good faith of the Government toward the aboriginal tribes.


Andrew Johnson, Veto Message Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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