Week 20: Dr. Chandler and Land Fraud

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The manner in which Dr. Alexander J. Chandler acquired the 18,000 acre Chandler Ranch is a scandalous story of speculation, land fraud, dummy mortgages, and investigations. It is a tale so familiar that it might have taken place in 2008, not 1912.

It began in Detroit in 1887 where Dr. Chandler worked for the D. M. Ferry Seed Co. as a large animal veterinarian. The doctor cared for the company’s animals and oversaw their experiments feeding alfalfa to cattle. The cattle industry was transitioning away from grazing animals on open ranges to feeding cattle farm raised crops. Alfalfa held the promise of a golden investment for the seed company if they developed drought resistant seeds that could excel in the arid western states. They began looking for western lands to experiment with different varieties of seeds, as well as produce the quantity of seed they would need to sell to a national market. When Dr. Chandler was approached by officials of the Arizona Territory to become the territory’s veterinary surgeon, the leaders of the seed company and Dr. Chandler realized that their opportunity was in Arizona.

A plan was hatched in which Dr. Chandler would take the job in Arizona and during the course of his duties as Territorial Veterinarian act as a land agent for the seed company. Upon his August 1877 arrival in Arizona, Chandler’s attention was drawn to the Salt River Valley where thousands of acres of potentially rich farmland south of Mesa remained unclaimed from the federal government.

The process to claim this land was laid out in the Desert Land Act of 1877 and allowed a married couple to acquire 640 acres for $1.25 per acre if they agreed to reclaim, irrigate, and cultivate the land. The obstacle for the partners was getting around the 640 acre limit.

The partners created an elaborate scheme to overcome this obstacle. First, they created an Improvement Company to manage all of their business. Next they offered a deal difficult to resist. For a potential investor, the Improvement Company would pay to acquire the 640 acres from the federal government, build canals to deliver water, and even plant crops to demonstrate that the land was improved. All investors needed to do was apply for the land.  In exchange for their name, the investor received a 40 acre farm free and clear. The catch was that the Improvement Company created a mortgage agreement on the value of the remaining 600 acres. If the investor could not pay off the mortgage in three years, the property would revert to the Improvement Company.  The vast majority of these investors never intended to farm the land. Some of the investors were secretaries for the seed company, maintenance workers, or spouses of Improvement Company employees. By the late 1890s, the partners had acquired much of the 18,000 acres.

By today’s standard, this process constituted land fraud because the investors perjured themselves in stating that no other entities had financial interest in the land they claimed. Furthermore, the Improvement Company wrote mortgages on land that it did not own.

In 1913 these shady land deals were revealed during the course of a Congressional investigation. Dr. Chandler was called to Washington D.C., where he testified for two days. He was never charged with any criminal acts, but the commission agreed that his Improvement Company had grossly circumvented the law while earning millions of dollars in the process.