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Published online by Cambridge University Press: 11 June 2012
Though often controversial, British investment has long played an important role in American economic development. But one sector where British capital has found a home is agriculture, where such investment has taken many forms in many places. In this essay Professor McFarlane looks at various land investments that Britons made in the North Central states, particularly Nebraska, during the last decades of the nineteenth and the first decades of the twentieth century, a time when there was a general agricultural boom in the cornhusker state, albeit one sandwiched around various business contractions. In his remarks McFarlane not only examines British strategies of investment but also quantifies its extent and its longterm return. To a degree his conclusions dispel some of the concerns and controversies that attended the flow of British capital into western lands.
1 Davis, Lance E.. “The Investment Market, 1870–1914: The Evolution of a National Market,” Journal of Economic History. 25 (September 1965). 355–399. esp. 355–356.CrossRefGoogle Scholar
2 For an excellent progress report on this topic see Bogue, Allan G., “Land Credit for Northern Farmers, 1789–1940.”. Agricultural History, 50 (January 1976), 68–100, esp. 70, 99, 100.Google Scholar
3 British parliamentary law requires all puhlic firms of limited liability to file a number of documents in the Companies Registration Office in London or Edinburgh. Upon dissolution of these firms the records go to the Puhlic Record Office (PRO) in London or to the Scottish Record Office (SRO) in Edinburgh. The London Stock Exchange (LSE) also maintains a huge file of business records of all firms that have been listed in the Stock Exchange Year-Book since 1875. Two authors have published monographs based in part on these records and relevant to this essay: Jackson, W. Turrentme, The Enterprising Scot: Investors in the American West After 1873 (Edinburgh, 1968)Google Scholar: and, Kerr, W.G., Scottish Capital on the American Credit Frontier (Austin, 1976).Google Scholar
4 McFarlane, Larry. “British Investment in Midwestern Farm Mortgages and Land, 1875–1900: A Comparison of Iowa and Kansas,” Agricultural History, 48 (January 1974), 179–198.Google Scholar
5 The Legislature passed a harsh anti-alien land law which also severely restricted the activities of foreign mortgage firms. See Laws, Joint Resolutions and Memorials of the Legislative Assembly of Nebraska, 1887 (Lincoln, 1887), 563–568; and Ashby, N.B., The Riddle of the Sphinx (Des Moines, 1890), 61, 81–82, 93, 247, 251, 265–267, 326, 410, 453.Google Scholar The agrarian journalist William H. “Coin” Harvey believed that the western half of Nebraska had been purchased or foreclosed by alien corporations. See his Coin's Financial School Up to Date (Chicago, 1895), 112. A number of studies (e.g., J. Sterling Morton, Addison E. Sheldon, James C. Olson, Dorothy Weyer Creigh) briefly mention the alien investment issue, but lack any in-depth analysis of it.
6 A number of studies treat various aspects of farm mortgage history in Nebraska. For an analysis of these see Bogue, “Land Credit for Northern Farmers,” 79–92. However, other than references to the Scully estate, I found only one brief discussion of alien investment. See Hinman, Eleanor H. and Rankin, J.O., Farm Mortgage History of Eleven Southeastern Nebraska Townships, 1870–1932 (Lincoln, 1933), 46.Google Scholar Hinman and Rankin found that as many as 16 percent of first mortgages in the sample area came from alien investment firms as late as 1883 and that 1888 was the last year in which those companies made any new loans. Moreover, both Kerr (Scottish Capital. passim.) and Jackson (Enterprising Scot, passim.) identify several relevant Scottish investments in Nebraska, but the two authors neglect English and American firms that also channeled British funds into the state.
7 Annual Report of the General Land Office for the Fiscal Year Ending June 30, 1878 (Washington, 1878), 15 158–159, 257–258.
8 Calculated from Abstract of the Fourteenth Census of the United States: 1920 (Washington, 1923), 594.
9 Report on Real Estate Mortgages in the United States at the Eleventh Census: 1890 (Washington, 1895), 95; Weaver, Martha C., Nebraska Farm Mortgages (Lincoln, 1932), 7Google Scholar; and Horton, D.C., Larsen, H.C., and Wall, N.J., Farm-Mortgage Credit Facilities in the United States (Washington, 1941), 219–221.Google Scholar
10 Calculated from Report on Real Estate Mortgages, 288–289; and, Fifth Biennial Report of the Bureau of Labor and Industrial Statistics of Nebraska, 1895 and 1896 (Lincoln, 1896), 249–252. The number of distress mortgages also rose in the 1890s, but the percentage of total loans is unknown.
11 Calculated from Report on Real Estate Mortgages, passim.
12 Bogue, Allan G., “Farm Debtors in Pioneer Pebble,” Nebraska History, 35 (June 1954), 81–113Google Scholar; Bogue, , Money at Interest: The Farm Mortgage on the Middle Border (Ithaca, 1955), 61, 230Google Scholar; Hinman and Rankin, Farm Mortgage History, 25; and Horton, Larsen, and Wall, Farm-Mortgage Credit Facilities, 227–228.
13 Edelstein, Michael. “The Determinants of U.K. Investment Abroad, 1870–1913: The U.S. Case,” Journal of Economic History, 34 (December 1974), 1001–1003.CrossRefGoogle Scholar
14 Examples of travel accounts include Montaque Davenport, Under the Gridiron. A Summer in the United States and the Far West (London, 1876), 92Google Scholar; Curley, Edwin A., Nebraska, Its Advantages, Resources and Drawbacks (London, 1875)Google Scholar; Leng, John, America in 1876: Pencillings During a Tour in the Centennial Year (Dundee, 1877), 199–201Google Scholar; Saunders, William, Through the Light Continent; or, The United States in 1877–78 (London, 1879), 34–35, 108.Google Scholar Promotion of Nebraska for settlement and investment is surveyed in Baltensperger, Bradley H., “Agricultural Adjustments to Great Plains Drought: The Republican Valley, 1870–1900,” in Blouet, Brian W. and Luebke, Frederick C., eds. The Great Plains: Environment and Culture (Lincoln, 1979), 43–59Google Scholar; Winther, Oscar O., “The English in Nebraska, 1857–1880),” Nebraska History, 48 (Autumn 1967), 209–223Google Scholar; Barry B. Combs, “The Union Pacific Railroad and the Early Settlement of Nebraska,” Ibid., 50 (Spring 1969), 5, 12–13, 15–16; and, Ian McPherson, “Better Britons for the Burlington: A Study of the Selective Approach of the Chicago, Burlington & Quincy in Great Britain, 1871–1875,” Ibid., 50 (Winter 1969), 272–307.
15 Adler, Dorothy R., British Investment in American Railways, 1834–1898 (Charlottesville, 1970), passim.Google Scholar; Olson, James C., History of Nebraska (Lincoln, 1966), 201Google Scholar; Stock Exchange Year-Book for 1901 (London, 1900), 1503; Hainlin, Lewis A., “Moreton Frewen: His Life,” (Ph.D. dissertation, University of Missouri-Columbia, 1968), 14–15, 17Google Scholar; Brayer, Herbert O., “Moreton Frewen, Cattleman,” The Brand Book (The Westerners, Denver, Colorado Posse), 5 (July 1949), 11, 16Google Scholar; Nebraska Party Platforms, 1858–1940 (Lincoln, 1940), 143, 184; and, annual reports to shareholders, 1896–1907, Colonial and United States Mortgage Company, Ltd., of Hull, England. LSE.
16 Prospectus, Edinburgh American Land Mortgage Company, Ltd., company's office, Edinburgh (EALMCR), September, 1878; and, Prospectus, American Freehold-Land Mortgage Company of London, Ltd., November 1879, LSE.
17 For a general discussion of this pattern of Scottish investment see Jackson, Enterprising Scot, 246–247.
18 File BT 2/671, SRO; Annual reports to shareholders, 1882–1889, LSE; and, Kerr, Scottish Capital, 182.
19 Scottish American Mortgage Company, Ltd., Records, company's office, Edinburgh, (SAMCR).
20 Files BT 2/770, 6222, SRO and. Annual reports to shareholders, 1880–1920, LSE.
21 Records, company's office, Edinburgh, EALMCR.
22 Kerr, Scottish Capital. 182.
23 Statement of Amounts on Loan and at Real Estate, Year 1886–87 SAMCR.
24 Some of the lands were in Cherry, Brown, Keyapaha, and Rock counties. Minute Book No. 9, p. 109, May 14. 1903; pp. 230–231. 28 April 1904, SAMCR.
25 Minute Book No. 1, pp. 248–249, December 4, 1883, EALMCR.
26 These were the Home and Foreign Investment Company, Ltd., (Norwich), the Land Mortgage Investment and Agency Company of America, Ltd. (London), and the Scully estate of Lincoln, Illinois. The first two firms' annual reports are in LSE. See also three works by Socolofsky, Homer E.: “William Scully: Ireland and America, 1840–1900,” Agricultural History, 48 (January 1974), 155–175Google Scholar; “William Scully's; Irish and American Lands, 1843–1976,” Western Historical Quarterly, 9 (April 1978), 149–161; and Landlord William Scully (Lawrence, 1979).
27 For example, Close Brothers and Company (London) and the Iowa Land Company, Ltd. (London) entered Nebraska from Iowa. See Iowa Land Company, Ltd. annual reports to shareholders, 1884–1894, LSE; and Van Der Zee, Jacob, The British in lowa (Iowa City, 1922).Google Scholar
28 Besides the Home and Foreign and the Land Mortgage firms (note 26) other multiregional ventures were the American and General Mortgage and Investment Corporation, Ltd. (London) and American Freehold-Land Mortgage Company, Ltd. (London). Interregionals: Scully estate (note 26), Colonial and United States Mortgage Company, Ltd. (Hull), and Anglo-American Land Mortgage and Agency Company, Ltd. (London). Regionals: Close Brothers and Company (London), Iowa Land Company, Ltd. (London) (note 27), Farmland Mortgage and Debenture Company, Ltd. (London), and Farm and Colonization Company, Ltd. (London). Interstate: American Mortgage Trust, Ltd. (London). These firms' annual reports to shareholders are in LSE.
29 Socolofsky, “William Scully,” 170–171, 173–175.
30 For example, the Iowa Land Company loaned in northeastern Nebraska in Cedar, Dakota, Dixon, Knox, Pierce, Stanton, Wayne, and adjoining counties.
31 Eveii if one makes an overly pessimistic estimate of a four-fold increase in foreclosures falling to English lenders the figure is still a modest 57,760 acres by the mid-1890s. See also note 43 below.
32 Multiregional; Lombard Investment Company (Kansas City, Mo.). Interregional; J.B. Watkins Land Mortgage Company (Lawrence, Ka.), New England Loan and Trust Company (Des Moines, Iowa), New England Mortgage Security Company (Boston). Regional: American Investment Company (Emmetsburg, Iowa), Fidelity Loan and Trust Company, (Sioux City, Iowa), Western Farm Mortgage Trust Company, (Denver, Colo.). Up to the years of their respective financial crises at least some records for these firms are in LSE. Additional information for tile Watkins firm is in Bogue. Money at Interest, 101–102.
33 commercial & Financial Chronicie (New York) December 28, 1889, 848.
34 Homer, Sidney. A History of Interest Rates (New Brunswick, 1977), 196–197.Google Scholar
35 Commercial & Financial Chronicle, April 22, 1899, 749.
36 David S. Trask. “Nebraska Populism as a Response to Environmental and Political Problems,” in Blouet and Luebke, eds. The Great Plains, 61–80, Humphrey, Seth K., Following the Prairie Frontier (Minneapolis, 1931)Google Scholar, preface, chapters 14–15, 181–189; and Bakken, Douglas A., “Robert E. Moore and the Security Investment Company in Nebraska, 1871–1921.” (M.A. thesis. University of Nebraska, Lincoln, 1967), preface, chapter 6, passim.Google Scholar
37 Calculated from Historical Statistics of the United States: Colonial Times to 1970 (Washington, 1975), Part 2, 1003, Series 480.
38 Many of the firms were active investors during more than one decade and are thus included in each decadal total covering their respective careers.
39 Two of the firms had previously withdrawn in the 1880s and three more in the 1890s. See Table 2.
40 Bogue, “Land Credit for Northern Farmers,” 84; and Report of the Public Lands Commission (Washington, 1905), 121–123.
41 The Nebraska estimate is $3,419,475 (see Table 2). This figure is divided by 890,506,968 (see Report on Real Estate Mortgages, 95), yielding a quotient of.0377.
42 McFarlane, Larry, “British Investment in Minnesota Farm Mortgages and Land, 1875–1900,” (unpublished paper, presented at Rocky Mountain Conference on British Studies, Denver, Colorado, October 1974)Google Scholar; McFarlane, , “British Agricultural Investment in the Dakotas, 1877–1953.” in Uselding, Paul, ed. Business and Economic History (Urbana, 1976), 112–126Google Scholar; and McFarlane, “British Investment in Midwestern Farm Mortgages and Land … Iowa and Kansas,” 196–198.
43 Nebraska farm acreage in 1890 was 21,593,444 acres (see Abstract of Fourteenth Census. 594). The estimate of 93,957 acres (see Table 2) is divided by 21,593,444, yielding a quotient of.0043.
44 “Coin” Harvey alleged that about half of Nebraska's rural land was owned by alien enterprisers (through foreclosure or purchase) by the mid-1890s (see note 5 above). See also Clements, Roger V., “British Investment and American Legislative Restrictions in the Trans-Mississippi West, 1880–1900.” Mississippi Valley Historical Review, 42 (September 1955), 207–228.CrossRefGoogle Scholar Several British ranching corporations operated in Nebraska. For instance, the Swan Land and Cattle Company, Ltd. (Edinburgh) owned 1,197 acres during the period and the Nebraska Land and Cattle Company, Ltd. (London) purchased 1,007 acres in 1883. However, this second firm was absorbed by an American enterprise, the Bay State Live Stock Company (which may have retained some small portion of alien ownership); it was the only firm located thus far which tried to sell more than 200,000 acres of its range to farmers on mortgage credit. Other British enterprises, such as the Dakota Stock and Grazing Company (London), owned small parcels of land, but the most common way to get land was to squat on the public domain. In 1886, for instance, the above firm was prosecuted for illegally fencing 5,380 acres in Sioux County, Nebraska. The alien ranches did occupy large ranges, but owned only small amounts of land in Nebraska — not enough to raise significantly the acreage estimate in this essay. For important comments on local range ownership see Richards, Bartlett Jr, Bartlett Richards. Nebraska Sandhills Cattleman (Lincoln, 1980), 62, 71, 79–80, 107.Google Scholar
45 Ermisch, John and Weiss, Thomas, “The Impact of the Rural Market on the Growth of the Urban Workforce: The United States, 1870–1900,” Explorations in Economic History, 11 (Winter, 1973–74), 150.Google Scholar
