Some Schemes of Enterprising Speculators -- Wichita KS - News Article Locations on Waymarking.com

The historic photo credit belongs to the Kansas State Historical Society.

From the Lawrence Tribune, an article about the shady dealings and speculation schemes surrounding the location the the 1887 Late Victorian Chicago, Rock Island and Pacific Depot in downtown Wichita KS, and other land scams prevalent at the time:

"Lawrence Evening Tribune August 4, 1887, page 4

Some Schemes of Enterprising Speculators Which Will be of Interest.
How a "Straw" Railroad Man Made $50,000.

Special Correspondence

WICHITA, July 27. In my last letter I told you the story of the wonderful growth of this town of Wichita; how in sixteen years it has become a city of 3l,000 people and how its development in the past year has surpassed that of every other town in the country. In this letter I wish to describe some of the curious phases of its growth and to give you some of the methods by which the immense amount prairie surrounding it has been sold as city lots.

In the first place, the town went crazy over real estate. Its actual growth was discounted 1,000 per cent, by the hopes of its citizens, and both the incomers and the resident were ready to accept any theory of its great future. Such of them as had the sense to see that this era of speculative values could not last hoped to get out before the boom subsided and property was bought foolishly with the sole expectation of selling at an advance to-morrow. The result of the whole has been that the farm lands within a range of four miles of the center of the town are laid out in lots, hundreds of new additions have been added to the old city limits and the city has taken in the whole six miles square of its township into its boundaries. Real estate signs grow like crops in widely distant fields, and the whole country is cut up into a network of projected motor lines which will lead to Wichita.

***
I met last night one of the influential men of Wichita, a man who is as well posted on what is going on as any man in it, and it is from his conversation that I give the following incidents of its boom. There is no doubt of the truth of his statements, which were given me on condition that his name should not be connected with them.

"I have been here," said he, "for two years, and have made money. I have kept my eyes open, and there is little that has gone on that I have not seen. We have had a wonderful growth, but we have been crazy during the past year, and all of the world seems to have rushed in to help us. We have had people here from every country of Europe and every part of the United States. The craze commenced the middle of last November and extended to the 1st of April, and during the latter part of it the real estate transfers ran as high as $2,600,000 a week. We gave out 973 licenses to real estate agents, and sold farm lands in lots priced at from $3,000 to $25,000 per acre. The craze is now over, and the citizens say they have stopped buying and gone to building. There is much building going on, but we will do well if we build up our present limits in a decade. Much property has been bought on credit, and the reckoning day is yet to come.”

"How was it possible to create such a boom?"

"I don't know. Our growth, which has jumped from 10,000 to about 32,000 in two years, started it, and the ardor of the speculative American relied on it. Some of the schemes by which lots were sold are worth telling. We had projected motor lines in every direction, and any farmer who wanted to sell his farm, two or three miles away; had only to-get up a straw company, pay $1.50 for a charter to the city, buy a few ties and rails and advertise it as a new addition. The speculators would rush for it, and his land would jump up from less than $100 to several thousand dollars an acre. The same was done by real estate agents, and of course in the majority of cases the lines were stopped building after the sales were made. As an instance of this, the following are some of the motor lines that have been projected:

1. Wichita and Valley Center line of eight miles in length, along the extent of which lots were sold
2. The Wichita and Suburban
3. The Mascot motor line
4. The Garfield motor line
5. The John Bright motor line.
6. The Rapid Transit motor line
7. The First Street and Central Avenue Motor Line
8. The Richmond motor line.
9. The Fair-mount Addition motor line

"All of these lines," the Wichita man went on, "were from three to eight miles in length. Their ordinances provided that they should have a noiseless motor through the city, and for this they might have used a dumb mule. They were stocked all the way from $150,000 to $1,000,000, and the spirit of speculation was such that of those who went into them, the majority expected to make money by selling out while the boom lasted. Of all these lines the rails have been laid for one only, and three-fourths of them will never be built.

“How could they get charters, and did they not have to give bonds in such cases?"

"No. Charters are the cheapest things in Wichita, and there are more charters granted in this Kansas town in a year than in all the rest of the United States. They merely paid their $1.50, which is the fee, and they got them.

"The street car lines of Wichita are mule lines with the old T rail, and the company which runs them is making money. Its stock is worth $250 a share, and in its charter it is strictly specified by the city that no other than the T rail shall be used. This charter was granted about three years ago, and the council did not then know that the T rail was the cheapest and meanest rail made. The car company took them in, but they have provided for other-styles of rails in the charters granted to other companies."

“I suppose there, was some swindling during the real estate craze?”

"It could not be otherwise. But those taken in as a rule smiled over it, and what they lost today they expected to gain to-morrow. One set of fellows, and nice men they were, came here from Pontiac, Mich. A real estate agent showed them thirty-five acres of land on the northeast edge of the town, which was partly built up. The agent claimed he had the land for sale and the Pontiac men bought it off him for $1,500 an acre, or $53,500 cash. The deeds were made out and the Michigan men went home. They returned soon and started to plot the land. They were running their first street through it when a white-haired old man came out and warned them to stop. He asked them what they meant, that he owned the land and had not sold it. Upon looking up the deed the Michigan men found the property described was not the property sold them, but that it was another piece lying more than six miles away from the city and good only for farming purposes. They looked for the agent, but he had skipped the country and taken their fifty odd thousand dollars with him. The Pontiac Men went back to their Michigan home.

* * *

"The railroad depot schemes that played during the craze were profitable and full of guile. We have had a number of new roads into Wichita, and a number were in prospect which never materialized. The selection of a point as the depot for any of these roads were sure to raise the prices of property several hundred per cent in that vicinity. Accordingly, the newspapers located them in all parts of the town one after the other, each to be changed for some unforeseen (?) hindrance. Both the railroad men and some of the real estate agents were in these schemes. The railways tried to get as much money as they could out of the people to help them build their depots and the real estate men profited by the sales of property.

"The Rock Island railroad wanted, for instance, to locate its depot on Douglas Street, which is, you know, one of the two chief business streets of the town, and was the best place for a depot. The property holders would not, however, give the $50,000 asked for it, and the railroad then proposed to build the depot three-quarters of a mile away on Oak street. This was to bring the Douglas street men to line, and they gave 125,000 more than was originally asked, or $75,000, to have it put where the road really wanted it.

The president of the road took their money after much urging; saying he would lose money by it, but he would to oblige them."

“One of the biggest depot schemes,” the Wichita man went on, "was played by a set of property owners upon a few real estate speculators. In these days speculators are closely watched here, and the new capitalist who comes in may be a gold mine to the town. One day last winter a grave looking, substantial, plug hatted stranger arrived here. He looked like a millionaire and he had the aspects of a good business man. He spent several days in going about the town and priced various properties, talking of the prospects of Wichita and its growth. At last, when curiosity had become great among the real estate men, he confided to several of them that he was connected with the Pennsylvania Central Railroad company and that that company proposed to extend its western terminus from Chicago to Wichita and he thought they would build a big depot here. This he told them in strict confidence and they jumped at the scheme. They looked upon him as one of the grand moguls of the road and offered him §25,000 cash to tell them where he was going to locate the depot. He took it and fixed the place on Main Street near Orme. The land was low, and was apparently a bad place for a depot. However, the real estate men were too big with their scheme to consider this, and they at once began to buy the property surrounding this point. Strange to them, the prices asked were rather high and the owners of the property wanted more than had ever been asked before. They bought, nevertheless, and paid cash. Some of them were connected with the Wichita and Western railway, whose track came in near the proposed spot. After they had bought several blocks it leaked out that the whole matter was a put up job, that the clever plug hatted Pennsylvania railroad man had been paid to play his part and that he had gotten a greater amount from the property holders for doing it than from the real estate men. He has not been seen in Wichita since he got his last $25,000, and the real estate men still hold their surprisingly high priced depot property. The outlines of the fraud were published in the papers here, but the men taken in begged the reporters to keep it quiet."

* * *

“Has there been anything of this kind in business property?”

"Yes. The Fourth avenue business scheme took in a horde of real estate agents. It was operated by several of the property holders, and aided by the newspapers in part. Fourth Avenue is a side street, half a mile out from Main. It lies parallel with the railway track, and the scheme in part was to make it a wholesale street, with the backs of the stores facing the track. It cuts Douglass Street, which is the other business street. One Wednesday morning in last February lots in this street were worth from $1200 to $3000 apiece. They were not very desirable for residence, and no one thought of them being good business lots, except at the junction with Douglass. One Thursday morning it was announced that the Wichita and Southwestern Hardware company had been organized with s capital of $250,000 and that a charter has been taken out for the same. The building was to be erected on this avenue and work was to begin at once. It was also announced, that the now Matthewson Academy of Music was to be located here, and a number of the property owners along this street, specified by name, stated that they intended to erect three and five- story buildings for wholesale houses, and the paper ventured the prediction that this might mean the beginning of the great wholesale street of the town. The day that this was published, Fourth avenue swarmed with real estate agents and property jumped from the former figures to as high as $7000 for lot of 25x150 feet. By 10 a.m. there were not enough hitching posts to tie the horses of the real estate buyers. The sales of Thursday, published in Friday's papers, made the matters worse, and the craze lasted till Sunday, when the people got time to think and the prices began to fall. In the meantime the older residents had sold out, and the property was almost all in the hands of new purchasers. Now the great hardware store has failed to materialize, the Academy of Music finds a defect in the title to the land it was about to buy, and Fourth avenue is destined to remain as it was, a second-class residential street.

* * *

Another way in which Wichita has increased its available building space has been by its colleges, and these schemes are also founded upon real estate speculation. When the town was mad the leading churches of Wichita advertised that they were going to establish great colleges in the new city and asked bids in land and money for the location of the site. The property holders responded liberally, and big buildings are either projected or are going up in a half dozen different parts of the country surrounding. Of course the property about these colleges has become desirable residence property and the colleges have gotten a nice endowment fund from the sale of the lots which they have laid out. The farmers who gave the land have made fortunes from the increase in the value of the property they had left, and it is now a great scheme which seems to make everybody richer and to hurt no one.

The first of these colleges was Garfield University, founded by the Christian church. It has a big brick building half up and has received, I understand, an additional endowment of $100,000 from the church outside of Wichita. It was given here about 300 acres of land. It reserved some for itself and plotted the rest. It has sold over $200,000 worth of lots and has yet three-fifths of its land left. The German Reformed church was in this same way given $200,000 worth of land. The Baptist church got $155,000 worth of land for the location of the Judson University and they have already begun to build. The Presbyterians got $300,000 worth of land for a university which they propose to build east of the city, and the Quakers received $150,000 worth for the John Bright university in the western part of the town. Then there is an institution being built which is, it is hoped, to be the Vassar of the west, and all told this new town has enough educational waste land cut to educate all the west. All of these institutions have sold lots and all have acquired nice endowments in money from their sale."

These are great schemes, aren't they?

But this is a great country and Wichita is a booming town!
FRANK G. CARPENTER." [end]

Type of publication: Newspaper When was the article reported?: 08/04/1887 Publication: Lawrence (KS)Evening Tribune Article Url: [Web Link] Is Registration Required?: yes How widespread was the article reported?: regional News Category: Business/Finance

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