RALPH A. BARNEY
Indian Claims,
or the Historical Appraisal
SINCE 1946, PROFESSIONAL APPRAISERS all
over the country have been engaged in the
fascinating experience of trying to deter
mine the fair market value of lands in the
United States as of dates ranging from 1923
to as far back as 1805, and extending in size
from 320 to 51,000,000 acres. These valua
tions have been made in Indian claims cases.
For those who are not familiar with the pro
gram of the Indian Claims Section of the
Department of Justice, let me explain fur
ther.
When our ancestors first landed in James
town, Virginia in 1607, they found the land
occupied and claimed by "Indians." From
that moment on, the white settlers relent
lessly acquired land from these people. Per
haps the most notorious purchase was that
A. BARNEY is associated with the Lands Divi
sion of the Department of Justice, where he is Chief of
the Indian Claims Section,
of Peter Minuit for the Dutch in 1626 when
he bought Manhattan Island for 60 guilders,
or about $24, paid in trading goods. Not
all of the colonial powers paid the Indians
for their lands, but following the Revolu
tion, by and large the United States did so by
entering into treaties under which the tribes
ceded a portion of their lands to the govern
ment in return for a money consideration,
services, etc. Our first treaty was made with
the Delaware tribe in 1778. In 1871 Con
gress stopped the making of formal "trea
ties" with Indians which required only the
action of the President and the Senate and
thereafter entered into "agreements" with
the tribes which required the approval of
both Houses of Congress and the President
to become effective.
It has been said, with some justification,
that when we acquired territory from Spain,
or France, or Mexico, the acquisitions were
169
170
The Appraisal Journal, April 1963
made for practical purposes, for sovereignty
rather than real estate; and that we still had
to buy out the Indians. Whether this was
true legally is of no consequence. That is
what we proceeded to do over all these years,
and it is this fact which gives rise to the
necessity for determining the value of these
purchases and acquisitions.
When the treaties or agreements were
made, we paid the Indians in most instances
what appeared to the negotiators to be a fair
price. There were, of course, instances
where the Indians contended, even in those
days, that they had not been adequately paid
for their lands. But generally the Indians
appear to have been satisfied, and there are
numerous instances of real bargaining be
tween the representatives of the Indians and
those of the United States. But as time went
on and the Indian became more sophisti
cated, and as he has seen conditions change
from his hunting and gathering economy to
what it is today, he has concluded that the
land which he sold for 2^ or 3^ an acre was
far more valuable than that.
But because no one can sue the United
States without its consent, there was nothing
the Indians could do about it. Even after the
Court of Claims was established in 1855 to
hear and determine claims against the
United States, the Indians were barred be
cause in 1863 Congress prohibited the Court
from hearing any claim by an Indian tribe
growing out of a treaty. However, Congress
did, from time to time, permit individual
tribes to bring suits in the Court of Claims;
but this practice became quite burdensome
on the Congress. Each bill had to be sepa
rately considered and enacted. Sometimes
a bill would get through one House but not
the other; if it got through both Houses,
the President might veto it; and then the
process started all over again.
In the meantime there was a great deal of
agitation to permit the Indian to have his
"day in court" so that all his grievances,
both real and imaginary, could be settled
once and for all. And so, in 1946 Congress
created what is known as the Indian Claims
Commission. The title is unfortunate. The
Commission is really a court, although its
jurisdiction is limited to hearing claims by
Indian tribes, bands, and other identifiable
groups of Indians, and it may render only
money judgments against the United States.
That is all it can do; it can't give any land
back to the Indian; it can't put anyone in
jail; it can't issue injunctions, or do any of
the other things that courts generally can
do. But it does have the authority to render
money judgments against the United States.
Of course Congress could, legally, refuse to
pay a judgment, but it never has. Once the
judgment becomes final it is reported to
Congress automatically by the Treasury
Department and the Bureau of the Budget
and included in the next appropriation bill.
In very brief summary, that is the back
ground of how the problem came about,
and brings us to the Act of 1946 which cre
ated the Indian Claims Commision 1 before
which these cases are heard. It is one of the
most remarkable pieces of legislation ever
enacted by any government anywhere at any
time. It is living evidence of the fact that
the United States is willing to rectify any
past mistakes it may have made.
There are five grounds on which the
Commission may entertain claims by Indian
tribes. The first two are normal; that is,
claims arising under the Constitution, laws
1. Act of August 13, 1946, 60 Stat. 1049, 25 U.S.C.,
sec. 70 et seq. The Commission consists of three members.
Appeals may be taken as of right to the United States
Court of Claims, and the Supreme Court may review
the decisions of the Court if it feels it necessary or justi
fied.
Barney-. Historical Appraisals
or treaties of the United States, or equitable
claims including torts. The fourth ground
provides, in effect, that if the United States
agreed to pay a tribe and didn't do so, the
tribe may recover. The fifth ground is
unique in the field of jurisprudence. So far
as I know no other government has ever
authorized any court, board, or commission
to render a money judgment upon the basis
o£ "fair and honorable dealings that are not
recognized by any existing rule of law or
equity."
The ground of the act through which
most appraisers get involved is number
three, which authorizes the Commission to
consider r
Claims which would result if the treaties,
contracts and agreements between the claim
ant and the United States were revised on the
ground of fraud, duress, unconscionable con
sideration, mutual or unilateral mistake,
whether of law or fact, and any other ground
cognizable by a court of equity. (Italics
added.)
So that you can visualize the problem, let
me outline a concrete case. During the sec
ond war with Britain in 1812, a portion of
the Creek Indians joined the British and
fought against the United States. Following
the defeat of the Creeks at the battle of
Horseshoe Bend in 1814, General (later
President) Andrew Jackson entered into a
treaty with the Creek nation in which he
required the Creeks to cede to the United
States approximately 25,000,000 acres of
land in what is now southern Georgia and
most of Alabama. He paid them nothing
for the cession on the ground that it was an
indemnity to the United States for their un
authorized actions. The treaty was dated
August 9, 1814. The Creeks filed a claim
under the Act to recover the value of the
land. The Commission held that, while
Jackson was justified in requiring the ces-
171
sion of the land occupied by the disloyal
Creeks, he was not justified in taking the
lands of the loyal Creeks,2 and held that the
government must pay the Creeks for .the
8,986,653 acres that he improperly acquired.
So, here is the problem: What was the fair
market value of 8,986,653 acres on August
9, 1814, 1,373,853 acres of which were in
what is now Alabama, and 7,612,800 acres
(including 400,735 acres in the Okefinokee
Swamp) were in Georgia?
A moment's reflection will make clear the
enormity of the assignment. First, of course,
is the size of the tract almost 9,000,000
acres 3 which must be valued as a whole.
Second is the date 1814. The United States
had been a sovereign nation for less than
30 years, and the date is almost 150 years
ago. Because of these two factors of time
and size, the appraiser cannot call upon his
experience in previous cases. But because
an experienced appraiser presumably knows
and understands the elements which pro
duce land values, the parties and the Com
mission turn to him 4 for guidance in arriv
ing at an educated guess as to the proper
value.
Theoretically, the problem of valuation
as of 1814 and of a tract of almost nine mil
lion acres is no different than an appraisal
as of 1962 of a large tract say, a ranch. The
essential elements of value are the same:
demand, transportation, highest and best
use, economic conditions, etc. Obviously,
the facts and conditions will be different
2. This decision is not final. The Indians have the
right to appeal to the Court of Claims.
3. This is by no means the largest tract. We have
appraised and the Commission has valued one tract of
30,530,764.8 acres as of 1868, and another of 51,210,000
acres as of 1865.
4. Not all witnesses have been professional appraisers.
Some have been historians, economists, and others
thought to be qualified. The writer expresses no opinion
on the propriety of this practice.
172
The Appraisal Journal, April 1963
for each tract; but so are the facts and condi
tions relating to any modern-day valuation.
What makes the solution of the problem
more difficult is the lack of knowledge on
the part of the appraiser and his lack of ex
perience in dealing with such vast areas of
land at such remote periods of time.
History
The lack of knowledge can only be over
come by the study of the history of the era
and of the area. That is why I have called
the valuations "historical appraisals." They
truly are such because the values to be deter
mined must be based on conditions as they
then existed, and the only manner by which
those conditions can be discovered is by in
tensive historical study of the area before
and at the valuation date. Unfortunately,
this is where many appraisers get bogged
down. American history, and particularly lo
cal history, is an interesting subject, and so
the appraiser gets fascinated (as I have) and
tries to read every bit of history ever pub
lished relating to the area. The result is that
the appraiser becomes thoroughly confused
in a morass of history, and only after he gets
over his historical jag does he realize that
most of what he has read has absolutely
nothing to do with the problem at hand. It
is nice to know, for instance, that Georgia
was originally a proprietary colony; but
what has that to do with the value of land
in Georgia?
Because most appraisers are not historians
or trained historical researchers, I have often
suggested to government appraisers that a
professional historian be employed. Presum
ably he will have the basic data at his com
mand, but a tight rein is needed. Historians
love to make investigations of historical
facts, particularly if someone else is paying
the bill. But the appraiser in Indian claims
cases is interested in history of a specific
nature. To give it a label, it may be called
"economic history," designed to discover
such things as: What was the mode of trans
portation at the time and place? What was
the agricultural technology? Where were the
people who might be interested in buying
the land? What kind of land did they want?
Did they have money? What were the pre
vailing interest rates in the area? And so on.
To illustrate the problems we will return
to the Creek case, taking up, one by one,
the most important elements.
Location was as important in 1814 as it is
in 1963, but with a different emphasis. At
that time, the population of the country was
relatively small and concentrated along the
eastern seaboard. Georgia has only a short
coast line, and none of the area of the 1814
cession touched the coast. Alabama was, of
course, not only far removed from the east
coast, but was cut off from the south by
Spanish territory.
The problem for the appraiser, obviously,
is to determine the effect on value of the
location of the land with particular refer
ence to all other available land.
Transportation was probably more im
portant as a factor of value in the early nine
teenth century than it is today. There were
no jet or any other type of airplanes; there
were no automobiles; there were not even
railroads. And so commercial travel must
have been confined to animal-drawn land
vehicles or to waterways. Hence, the prob
lem is: How did people and commerce get to
Alabama and southern Georgia in 1814, and
how did people and commerce get out?
Rivers and canals will suggest themselves
immediately, but that will only raise the
question, when did canals come into exist
ence? If you remember history, you will
know that the Erie Canal wasn't completed
Barney.- Historical Appraisals
until 1825 and that, of course, was in New
York. Similar questions will arise as to when
steamboats were first used and where? The
fact that Fulton may have successfully oper
ated a steamboat on the Hudson River in
1807 doesn't help much in getting people or
goods into Alabama and Georgia in 1814,
nor produce out.
Therefore the appraiser must make a
thorough study of the transportation facil
ities available:What roads led into and out
of the area? What was their condition?
When were public roads first constructed?
The answer to these and similar questions
must be taken into consideration in arriving
at a substantial value,
Comparable Sales
As an appraiser, you would naturally be
interested in comparable sales. Obviously
you are not going to find any sale the size of
the 8,986,000-acre Creek cession. But re
search will turn up the fact that in the
early days of our history, there were large
purchases from the federal government and
several of the state governments, such as the
Ohio Land Company Purchase of 1796, and
the Scioto Purchase of the same year; the
Ogden Purchase from New York; or the
Yazoo Purchase in Georgia. And so you in
vestigate; that is, you spend time, energy,
and a lot of money to get the facts on these
transactions. A long time and frequently
many thousands of dollars later you dis
cover that these are not comparable sales
after all. They are usually too early in time,
or too far removed from the area to be com
parable, or, in the case of the Yazoo sales,
were so tainted that it would be disastrous to
rely on them.
And then there is the fascinating history
of the disposition of the public domain.
Because this greatest of all land sales pro-
173
grams took place many years ago, most pres
ent-day appraisers are not familiar with it;
and when they do discover it, the general
tendency is to go overboard. When the
United States acquired its "public domain"
from the original states, the immediate prob
lem was to dispose of it. The government
started out by selling on credit and in large
blocks much against the advice of Alex
ander Hamilton. The initial price was $2.00
an acre on credit, with a discount for cash
which made the price $1.64 an acre. The
credit system lasted until 1820 and nearly
bankrupt the people who, in that year, owed
the government more than $21,000,000.
Since I am using the Creek land in Ala
bama 5 as an illustration, let me give you
some facts. In 1818, the sales in two districts
totaled $5,428,000 for 1,530,000 acres. But
of the amount agreed to be paid, only
$1,500,000 had been paid when the bubble
burst.8 So the federal government enacted
a series of relief acts whereby ultimately the
purchasers could relinquish a portion of
the land contracted for, and keep the bal
ance. Out of the 1,530,000 acres sold, 649,000
acres were relinquished. The question is,
how does the appraiser use this data? Does
he assume that because 1,530,000 acres sold
for $5,428,000 the average price of land was
$3.54 an acre, when he also knows that
649,000 acres of the land were relinquished
and the debt for this acreage cancelled?
Following the collapse of the credit systern, Congress by an Act of 1820 required all
5. The United States had no public lands in Georgia.
Under a compact of 1802 the United States agreed to
acquire the Indian title and then turn the land over to
Georgia. This caused a difficult problem in the valuation
oC the Creek lands because of the existence side by side
of public lands administered under federal land laws,
and Georgia's lottery system.
6. Economic conditions obviously played as import
ant a part in this period as they do today, as I shall
point out.
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The Appraisal Journal, April 1963
public lands to be paid for in cash, at a mini
mum rate of $1.25 per acre. But these were
small sales of 160 acres or less, obviously not
comparable as to size. Whether they are
comparable in location must be determined
for each case.
Even though not comparable in size, the
sale of these small tracts of public lands can
be very useful in furnishing the appraiser
and the Commission with information
which can be utilized in arriving at the value
of a large tract. An examination of the sales
data is quite revealing when properly ana
lyzed. It shows, for instance, the demand for
land. If, when the land was surveyed and
opened up for settlement, a great many
people rushed in to buy it, the extent of the
demand for lands in the general area can be
determined. By carefully plotting the in
dividual sales on a map, the preferred loca
tions can be established, and by an examina
tion of the surveyors' description of the land,
the types of land wanted by the settlers can
be ascertained.
In such states as Iowa, Missouri, Kansas,
Nebraska, and others, it has been conclu
sively demonstrated that prior to the 1860's
settlers preferred lands containing timber
and water. Timber was demanded because
it was used as a building material, but it was
also an indication to the pioneer that the
soil was good. Although it may be difficult
to accept as a correct conception today, it
was once a widespread belief that land which
would not grow trees would not grow crops.
And so the appraiser, by carefully noting the
types of land bought in the adjacent or
nearby area, and comparing the type of land
in the tract to be valued, can get a pretty
fair idea of whether the subject tract would
be desired by settlers at the valuation date.
Since population did in fact spread bevond the timbered or wooded areas of the
eastern portion of the United States, it is
apparent that at some date the pioneer peo
ple either lost or overcame their fear of the
"prairie lands." In those cases involving the
transition area, the appraiser must discover
when this aversion disappeared. Again, his
torical research will disclose that beginning
in the 1850's the settlers began to realize that
prairies could be made to produce crops.
Commissioner of Patents Henry L. Ellsworth of Indiana was one of the early and
most enthusiastic advocates of prairie land
over timbered lands. But the prairies pre
sented problems. The tough prairie sod
just couldn't be broken with an ordinary
wooden plow. It took a steel plow; and so
the appraiser is sent scurrying off to find out
when the steel plow came into general use.
But even the steel plow was not too suc
cessful it would break the sod, all right, but
the dirt clung to it, and until the selfscouring plow was made, the change from wood
to steel was not too much of an improve
ment. Actually, it was not until 1877 that
thoroughly modern plows were in general
use. The importance of this simple fact is
that until the selfscouring plow came into
general use, the demand for prairie land was
limited.
As the agricultural frontier moved fur
ther west, it came into inevitable conflict
with unrestrained cattle.
Just as the pioneer farmer recognized the
need for cheap but adequate fencing, so the
appraiser must recognize that until this com
modity existed, the demand for prairie lands
would be diminished. He would probably
want to take into consideration, therefore,
the historical fact that barbed wire was in
vented by Joseph Glidden, who started to
manufacture it in 1874; that barbed wire
made it possible to keep trespassing cattle
out; and that it had a profound effect on
Barney; Historical Appraisals
farm values because now it was possible to
grow crops with safety. Such matters as when
the plow and barbed wire fencing were first
used successfully are not matters of mere his
toric interest; they are factors which pro
duced an important influence on the useful
ness of land, and hence its economic value.
Effect of Transportation
Just as air freight has today made possible
the utilization of many perishable foodstuffs,
and the steamboat supplanted the barge and
opened up new and more remote areas for
commerce and trade and thereby created
value in the land, so, too, the railroad made
it possible to ship goods from the west to the
east and manufactured products back to the
west. Both the Commission and the Court of
Claims have recognized that railroads in
many instances brought value to the lands.
It is the function of the appraiser to de
termine the extent to which the coming of
the railroads affected land values in the par
ticular area.
Insofar as the appraiser is concerned, the
coming of the railroad to an area whatever
its economic advantage to the settler may
have been poses problems. In order to stim
ulate the building of railroads, the federal
government made extensive land grants con
sisting of millions of acres. These grants
were of the odd-numbered sections along
the right of way in varying widths from 10 to
20 or more miles. They therefore became
competitive lands and, in many instances,
produced a material affect on the value of
the surrounding lands. The appraiser must
consider and decide for himself the extent
to which such lands affected the value of the
lands being appraised.
While Congress during the last half of the
nineteenth century most certainly could not
have anticipated that a hundred years later
175
appraisers, lawyers, and judges would be
struggling with the problems of land values
as of that period, it did pass a series of acts
which have made the job of valuation im
measurably more difficult. In addition to the
tremendous land grants to railroads, Con
gress in 1854 passed a Graduation Act. For
the first (and only) time, public lands were
offered at different prices ranging from
12l/£^ an acre for land which had been on
the market and unsold for 30 years or more,
to $1.00 an acre for those lands which had
remained unsold for 10 years. While the
lands affected by the Graduation Act were
largely located in the older states, these lands
and prices pose difficult and serious prob
lems for the appraiser attempting to value
Indian lands in their midst.
In 1862 Congress repealed the Gradua
tion Act, and in 1863 passed the Free Home
stead Act which gave as much as 160 acres
to a settler who would live on the land for
a period of five years and cultivate a portion
of it. The appraiser must carefully consider
the effect of such free land on the value of
surrounding Indian land which is to be ap
praised at its fair market value. How much
would a prospective purchaser pay for land
adjoining or surrounded by free land?
In 1846 the United States acquired un
disputed sovereignty over what is now
Oregon and Washington. In 1848 we ac
quired a vast area (including California)
from Mexico by the Treaty of Guadalupe
Hidalgo. In 1853, by the Gadsden Pur
chase, we acquired from Mexico another
29,000,000 acres to round out the continen
tal American domain to its present bound
aries (excluding Alaska which we acquired
from Russia in 1867).
Each of these acquisitions presents differ
ent and difficult problems for the appraiser.
Oregon and Washington are predominantly
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The Appraisal Journal, April 1963
timbered areas; but what was the value of
billions of board feet of timber in an area
remote from population and industry?
The United States did not acquire any
public lands in Texas, but the remaining
lands in New Mexico, Arizona, and Cali
fornia present problems often difficult to
solve. The principle of free range has been
firmly established in American economics.
How does any appraiser value a tract of
1,449,304.77 acres in Oregon as of 1879,
which was entirely surrounded then by free
range land, and even today is still largely
owned by the federal government and is still
essentially range land?
During the half century from 1850 to
1900, fifteen states were admitted to the
Union, all of which (except West Virginia)
were west of the Mississippi River. As to
each, the appraiser must consider its impact,
if any, on the land upon which he is attempt
ing to value.
The appraiser must consider carefully the
economic conditions of the times not only
nationally but locally. President Jackson's
feud with the Bank of the United States in
some areas had a profound effect on land
sales and land prices. Inflation and land
speculation based on paper money was re
flected in the increase of land sales from
$2,623,000 in 1832 to more than $24,000,000
in 1836. On July 11, 1836, Secretary of the
Treasury Woodbury, on President Jackson's
order, issued the famous Specie Circular
which provided, in substance, that only gold
and silver (and some scrip) would be ac
cepted by the government in payment for
public lands. The results were far reaching
and, in some areas, extreme. Not only did it
succeed in reducing the sale of public land,
but it bankrupt many state banks. It led to
the issuance of "red dog," "blue pup" and
other sectional currencies which were
largely unaccepted even by the local mer
chants. The appraiser must in each instance
carefully consider the values of the land he
is appraising. It is by no means an easy task.
Historians themselves are not consistent as
to the effect of economic conditions which
existed in different localities at various
times.
The effect of timber on land values poses
more problems. Once again the appraiser
must resort to economic history. While to
day the hardwoods are the most valuable of
the lumbers, this has not always been true.
Hardwoods won't float, and in the days be
fore the railroads when the only practical
manner was to drive logs on rivers, lakes,
and streams, timber which would not float
was a liability, not an asset. The appraiser
must be familiar not only with the com
mercially valuable types of timber, but its
accessibility. To neglect this aspect or to
misinterpret the conditions is to court dis
aster.
The presence of minerals in an area pre
sents a particularly difficult problem which
the appraiser, the Commission, and the
Court of Claims, equally, have struggled to
solve. It is indeed difficult not to let hind
sight influence the thinking and judgment
of the appraiser. How does one deal with
an area in Nevada which included the fa
mous Comstock lode, or the area in South
Dakota which included the Homestake
mine? 7 In the Nez Perce case,8 the Commis
sion had to determine the value of gold
removed from a reservation area in Idaho
by trespassers during the period 1860-1867,
where the amount of gold removed was at
best a guess. The problem is illustrated by
7. Both of these areas are involved in cases pending
before the Commission.
8. Nez Perce Tribe v. United States, 8 Ind. Cl. Comm.
300, 344-345 (1959).
Barney: Historical Appraisals
the fact that one estimate of the gold re
moved from the reservation was $25,913,611,
while another estimate was $15,133,778. As
the Commission said in its opinion:
... The large discrepancy between the
experts' estimates of the amount of gold pro
duced results from their different interpre
tations of the source material available for
study with respect to the factors considered
and to a difference of opinion regarding the
amount of gold produced that should be
credited to the reservation where mining
districts were located but partially within
the reservation....
Although this comment was made with
reference to a particular case, it epitomizes
generally the problem faced by every ap
praiser in every case. Each case requires an
objective evaluation and interpretation of
relevant source material to which must be
applied proper appraisal techniques and
legally acceptable principles of valuation.
Unfortunately, too many appraisers have as
sumed that because factually the problem is
different from those encountered in present-
177
day valuations, the principles upon which
the value is to be determined should also be
different. In every instance, the Commission
has rejected such attempted departures from
established legal principles. The test is: the
fair market value of the tract as a whole, on
the valuation date.
The record to date is that in 45 cases in
which land values have been determined by
the Commission, it has found the value of
189,394,810 acres to be $138,457,694.61,
with values ranging from 40^ to $3.75 an
acre. (A prospective oil-bearing area was
valued at $200 an acre, but this was not the
usual situation.)
The work of the Commission is far from
complete, and many more appraisals and
appraisers will be required by the govern
ment as well as by the Indians. Most ap
praisers have found the task of making
Indian claims valuations a rewarding ex
perience which has opened up whole new
areas for constructive thought requiring
hard work, infinite attention to historical
detail, and vivid imagination.
The most complete revenge is not to imitate the aggressor.
Marcus Aurelius