Obrien County IA Archives History - Books .....Chapter IV Upbuilding 1914
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Book Title: Past And Present Of O'Brien And Osceola Counties, Iowa

CHAPTER IV.
UPBUILDING.

TAXPAYERS' ASSOCIATION.

    Inasmuch as this association as an organization lasted from 1877 until 1881,
a full statement of its work in the county will be given.

CONSTITUTIONAL LIMITATION.

    The Constitution of the state of Iowa, in very plain language, says that any
debt contracted by a county in excess of five per cent, on its valuation is
absolutely void. The people in O'Brien county by this time (1877) were in quite
large numbers, about two thousand seven hundred, and this, in fact, was about
the time the county should have been organized. The people when once awakened
became very indignant.

    To the indignant and taxed voter this five per cent, limitation seemed clear
and that the remedy must be sure. And truly it was a fit subject for public
wrath. Many good citizens felt that there was no moral obligation to pay the
unjust portion, and some legal decisions of high import seemed to indicate a
fair prospect of defeating it, and its defeat was naturally agitated. The main
discussion centered around section three of article eleven of the state
Constitution, though lesser questions were incidental to it.

ORGANIZATION OF THE ASSOCIATION.

    A well organized Taxpayers' Association was the result. It grew rapidly and
at-one time included a good majority of the people of the whole county. The debt
question was practically settled January 4, 1881, yet the association continued
its activities until about 1890. While the writer did not coincide with this
effort to defeat the debt, he has always recognized that this association did a
good work in the county, in assisting in and insisting that the bad work
commenced in 1860 should not continue. The writer, in 1879, was asked by the
members of the Taxpayers' Association to run for county auditor on that ticket.
He, disagreeing with them on that subject, it placed him on the other side, and
he was elected in 1879 to that office on the side of payment of the old debt.
This organization was formed for the express purpose of defeating this old debt
in whole or in part, to agitate inquiry into the matter, and to enlist, not only
citizens, but nonresident land owners, to contribute in money, on the argument
that if the debt were defeated taxes would be lessened. There is no doubt that
the county would have been a unit on this question had there not been in the
opinion of many still higher questions that they thought should control, namely:

    1. The injury to the credit of the county and its later results on the county.

    2. In the judgment of many, impracticable.

    3. The still more serious question that the county had had its day in court,
or res adjudicata, with due service of notice on the proper county officials,
and this these sharpers, many of whom were good lawyers, had looked after. In
other words, that the United States courts do not render serious judgments for
nothing or as a pastime. By this time, 1877, about two-thirds of the whole debt
had been thus rendered into judgment, and that portion that had not been put
into judgment had been intermingled with the judgments and put into bonds, until
it was, as was thought by many, impracticable to separate them.

BOARD OF SUPERVISORS IN LIMBO.

    One humorous event happened. On one large judgment rendered a mandamus was
issued, commanding the board of supervisors to make a levy of taxes to pay it.
They delayed and did not act. They (in 1875) were cited to appear before the
United States court at Des Moines to show why they should not be punished for
contempt of court. The board, by its chairman, asked by what authority their
action or nonaction could be interfered with. Judge Love replied that "It was by
the authority of the United States court, and that the United States court did
not act trivially." In result, the court's writ said in plain English, to the
board, to make the levy or go to jail, and so the court informed them. The board
made the levy. Put into common language, the decisions of the courts held that
this five per cent. limitation was a defense that the county could have made,
but, failing to interpose when judgment was rendered, its day in court had been
had and the county closed out.

    This effort to defeat the debt (or Taxpayers' Association) was the outgrowth
of a righteous indignation, and taxpayers' popular meetings were held all over
the county. Attorneys were employed. The records were thoroughly searched, in
which both sides of the question were discussed. .-It was discussed in school
house lyceums. All citizens were bent on a full search to find out the
situation. An injunction was issued in an equity suit in the district court of
the county, entitled, "A. P. Powers and One Hundred and Ninety-nine Others,
Plaintiffs vs. O'Brien County and its Officers, Defendants," to enjoin the
payment of all bonds and judgments until the question of the validity of the
bonds and indebtedness could be investigated.

TAXPAYERS' ASSOCIATION PICNIC.

    It is not every picnic which could be dignified to a place as an historic
item, even county wide. This was, however, one of the most important public
gatherings ever held in the county. The writer attended. There were about four
hundred people there, mainly from the eastern part. The meeting was serious.
Grasshoppers had eaten everything up. It was held in July, 1878, on Waterman
creek in Grant township. Taxes were high. Many were refusing to pay taxes, and
had done so for four years. It was indeed a righteous wrath. The question was
discussed quite a portion of the day, and very earnestly. The writer was then a
very young man, and was somewhat loth to be too positive, though he had looked
it up and came to the conclusion, for reasons stated above, that defeat of the
debt was out of the question, as had also decided many others who were there.
The writer was called upon, and stated that he did not come to interfere with
the meeting, but had come to the aforesaid conclusion, and sat down without
discussion. Later it was insisted that he go into the question. Colonel Hepburn
was expected to speak. He had delivered the Fourth of July speech there that
year, and, as a sentimental question, gave a very fervid opinion that it should
be beaten. He later on looked it up and came to the same conclusion that it was
not practical. Many took part, each speaking at length, Messrs. Schee, J. L. E.
Peck and Harley Day in favor of payment and Messrs. Huse Woods, Ralph Dodge,
Thomas Steele and others in favor of defeating it in the courts. It is too long
to enter into the discussions of the day. One item will suffice to show the
fervidness of the meeting. As stated, many had not paid taxes for several years.
Mr. Steele jumped up and said, "that the farmers of O'Brien county would camp
out on their farms, and would not pay a cent of taxes, and that they would hang
to the nearest wagon tongue the first county officer who would attempt to
collect a cent of tax for the purpose." This expression came from an honest
heart and was in essence a righteous condemnation of a great moral wrong-that
had been done. On moral lines and as applied to Bosler, Cofer & Company it was
unanswerable. But the argument on the side of payment prevailed, namely, that,
whether right or wrong, the county had been in court and judgments rendered;
that they were closed out; that it was impracticable; that in the future
judgment of O'Brien county and its future citizens that they would feel a higher
sense of honor in having paid even an unjust debt, even a fraudulent debt, which
it was, than to have a prolonged fight for years, and that the future people
would be the better satisfied. At that meeting Mr. Steele's statement was
cheered to the echo. Still the day's discussion drew the lines sharply
throughout the county. The people began to see that there were two sides to the
question, and articles were written in the papers, and discussed in many ways.
Mr. Steele's statement voiced public indignation.

THE TWO SIDES.

    The leaders and prime movers in this Taxpayers' Association were A. P.
Powers, W. H. Woods ("Huse"), Thomas J. Steele and hundreds of others, and
including E. Kindig, Ralph Dodge and Joseph Rowland, members of the board. On
the other side were Thomas Holmes, Ezra M. Brady, Jacob Wolf and William Oliver,
members of the board, and a solid delegation of the then county officials,
George W. Schee, then county auditor, and J. L. E. Peck following him in the
office, T. J. Alexander, treasurer, Hubert Sprague, recorder, Harley Day and
David Algyer, county superintendents, and William N. Strong and Frank N. Derby,
each clerks and later treasurers. These men each threw their weight on the side
of payment, as did many others in the county. But the majority sentiment of the
county finally settled to this policy, as the only way out of the dilemma. It is
a curious fact that this main suit brought by A. P. Powers was never tried in
court, as a court trial. In all reality it was tried by the court of public
opinion and discussion. The Taxpayers' Association served its purpose and a
useful mission. Its agitation aided in bringing order out of chaos. Many
meetings were held in various parts of the county.

    This important and far-reaching suit was brought in the district court of
O'Brien county, as stated, by A. P. Powers and one hundred and ninety-nine
others as plaintiffs and landowners to stop and enjoin the county treasurer by
injunction from paying these bonds or county debt. It was taken to the supreme
court of the state. The question was raised that each plaintiff must bring his
own suit. Two hundred resident and nonresident landowners had united in the suit
on the belief that they could thus join. The supreme court decided on October 6,
1880, in effect that they could not so join. (See case of A. P. Powers and One
Hundred and Ninety-nine Others vs. O'Brien County, in 54 Iowa Supreme Court
Reports, page 501, for the decision.) This decision also held that it would not
enjoin that part of the debt or those parts of the debt given for actual
necessities. These bondholders had mixed these parts of the debt for
necessities, the good with the bad, until it was seen that an endless chain of
litigation was to follow. This decision practically paralyzed further
proceedings. The board had refused to bring the suit. The United States court
had held that the board only could bring it in that court. Add to this the
further outlook that even after such an injunction was fought through and even
sustained, that the bondholders, not yet made parties, could go into court each
separately and test out these several rights and questions, and the still
further fact that it was tying up the county business—all contributed to its
final dismissal. Both sides agreed that the debt as such was unjust. It was
simply a question whether to fight it was practical. The court's decisions thus
far seemed to sustain the contention of the side advocating payment as the best
road out of the bad matter. The meshes of the law seemed too intricate to
practically contest out such complications. A. P. Powers, "Huse" Woods and many
other leaders in this large movement spent much time in this earnest effort to
defeat this unjust debt. Three months after this, on January 4, 1881, the
county, by its board of supervisors, rebonded the whole debt, as shown
elsewhere, and followed up with the policy of payment of the debt, and the last
bond was paid off in 1908. The Taxpayers' Association employed the legal firm of
Miller & Godfrey, of Des Moines, the chief members being Judge William E.
Miller, prior chief justice of the supreme court of Iowa. The firm of Joy &
Wright, of Sioux City, represented the other side of the question.

RESUMPTION OF CASH PAYMENTS.

    During these years it also occurred that thousands of dollars of worthy
county warrants were issued for necessities and supplies, and presented and
marked "Not paid for want of funds." Up to 1876 not even a list of the items of
debt or list of bonds or judgments had been prepared. The speculators, however,
had looked to it in each set of bonds issued that a resolution ordering this and
that bond was drawn up in legal shape and recorded in the supervisors' record.
George W. Schee was elected in 1875 to qualify January 1, 1876, on the
conditions that these debts and judgments and bonds must be looked into, made of
record and the public informed of the results. Mr. Schee made the first
tabulated list of the indebtedness; indeed it was an exhaustive search of every
possible debt, bond and judgment, rendered in the various courts, and tabulated
them in a record purchased by the board expressly for that purpose. Therein Mr.
Schee rendered the county a very great service in putting matters into shape
where the people were informed of the real condition and what the county was up
against. The more the search, the deeper and more deplorable it was found. The
debt as finally summed up (and his tabulation stood the test of the later years
of examination), showed a total debt of two hundred and forty thousand dollars
in 1876 and two hundred and thirty thousand dollars in 1880. All that had been
bonded bore ten per cent. The annual interest, therefore, reached above twenty
thousand dollars. As this was not being paid, it was simply adding itself to the
unfortunate situation.

ANOTHER NOTABLE MEETING.

    It was perhaps ten days after the above taxpayers' picnic in Grant township
that a meeting, not of the mass, but of perhaps fifteen men, met in the hardware
store of Ezra M. Brady, including, as nearly as the writer can from memory give
them: Mr. Brady, George W. Schee, J. L. E. Peck, William W. Johnson, Isaac W.
Daggett, Harley Day, George Hakeman, Hubert Sprague, C. Longshore, Thomas Holmes
and perhaps others. They all agreed that something had to be done. It was not a
called meeting, but the discussion brought them together. The one theme was to
see what could be done to put the county on a cash basis where it could resume
cash payments of its outside obligations. At that meeting it seemed to be
conceded that the policy proposed by the Taxpayers' Association was
impracticable, and that something more substantial must be the final policy of
the county. In addition to the twenty-three thousand dollar interest on the
public debt, there was the regular annual running expenses, which required three
dollars in county warrants for each dollar needed. It was insisted that the
public finances could not stand up under such a strain, that the county must be
put on a cash basis. The tax lists were carefully examined and the amount that
was likely to be collected from taxes determined. Then it was urged that for a
trial year that the expenses of the county must be kept within the sum. It was
further decided that the board of supervisors be asked to pass a resolution, in
effect, discarding for the time being all back debts, so far as any present
effort to pay same. This resolution was finally adopted to apply to the year
1879, the resolution reading that all county warrants for that year should have
endorsed thereon in red ink the words: "Issued on the levies of 1879," which
meant that all expenses of that year should be paid out of the taxes collected
for that year. When once a man could get one hundred cents on the dollar for his
warrant, it became at once worth one hundred cents. The plan worked immediately,
and for all time thereafter. The total expenses on the county fund for this last
year of the term of George W. Schee as auditor was just a little over five
thousand dollars, and for 1880, the first year of J. L. E. Peck as auditor,
about six thousand dollars. Later on, when the county got a surplus of funds,
the older and then discarded warrants outstanding were paid in full, and O'Brien
county established on a cash basis. It was hardly a case of resumption, as the
county had never been on a cash basis since its organization. It was rather a
case of establishment of that condition. The real credit for the originating of
this plan must largely be given to George W. Schee, Ezra M. Brady and Thomas
Holmes, and to its fulfillment, to the board, then composed of Thomas Holmes,
Ralph Dodge, J. H. Wolf, Ezra M. Brady, William Oliver, Emanuel Kindig and
Joseph Rowland, who were among the members of the board during the following two
years. It was not simply in the policy thus adopted, but the principle was
carried out in the details of public expenses. For instance, the board insisted
that the auditors, George W. Schee and J. L. E. Peck, should serve for seven
hundred dollars per annum salary, this being later on enlarged to eight hundred
and twenty-five dollars. All other officials and expenses were put on a similar
basis.

TAX SALE OF 1880.

    As we have shown, the citizens quite generally for four years up to 1880 had
refused to pay their taxes, on the line of the picnic speech by Thomas J.
Steele, candidate for county auditor. The statutory penalties had added largely
to the amount of taxes due. At the tax sale held October 7, 1880, conducted by
T. J. Alexander, treasurer, and J. L. E. Peck, county auditor, these delinquent
lands were sold for these four or less years as per the facts, for full taxes
and penalties. A tax sale purchaser under the then law, got a penalty at once
added of twenty per cent, as an inducement to purchase, and then ten per cent,
interest on the whole amount. This, in connection with the fact that the values
of land had risen somewhat, and the further fact that the county had at this
date been on a cash basis for one year, and the people were getting heart again,
brought out a large number of bidders and was the largest tax sale ever held in
the county. The sale, together with funds from a prior sale, amounted to thirty
thousand dollars. In the regular course of funds, this sum should have been
distributed to the several county, poor, bridge and school funds, as per levies,
and in theory of law it could have been enforced. The board, however, took the
bull by the horns, as it were, discarded the question of funds, and applied the
whole thirty thousand bodily on the debt of two hundred and thirty thousand
dollars., This, as can be seen, reduced the debt to even two hundred thousand
dollars. While in a sense it was illegal, yet as the four years were past, and
even the schools needed only the coming current year's taxes, the people
justified the board's action. It was one of the very few cases where a direct
violation of law proved a crowning success. At all events, this payment and
reduction of thirty thousand dollars of the public debt gave new heart to the
people. It was the first lifting of a dark cloud.

REBONDING OF JANUARY 4, 1881.

    On January 4, 188-1, on the opening of the second year of the term of J. L.
E. Peck as county auditor, a further decisive action was taken by the board. Ten
per cent interest on this debt still loomed up as a hard fate. On that date a
resolution was passed to rebond this remaining two hundred thousand dollars of
the debt by an issue of new bonds to take up all outstanding matters and to bear
seven per cent, instead of ten per cent, thus reducing the annual interest six
thousand dollars'. This also revived the spirits of the people. The grasshoppers
had quit, which had also lifted further the clouds. The reduction of the annual
expense on the county fund to five thousand dollars, and even as late as 1883 to
eight thousand dollars, broke loose still more clouds, for the blue sky and the
sun to shine through. The effort to defeat the debt vanished entirely, and this
fact gave the county, as well as individual obligations and land loans, a better
credit. Land began to be quoted as a thing of real value, though even then at
only from five to eight dollars per acre, and the people began to realize the
dream of a home in O'Brien county. It took seventeen thousand signatures for the
county auditor to sign those bonds and the coupons of interest attached, which
still said that the county had a yoke on its neck. The railroads were in the
meantime being actually built, the Milwaukee in 1878 and the Northwestern in
1881, and the people began to conclude that we might even yet amount to
something. New settlers were added and people began to talk of the grasshopper
times as a past calamity. Still later on this debt was again rebonded and the
interest this time reduced to five and still later to four and one-half per
cent, and the people began to see the clear sky clear down to the horizon. But
even then the people were exclaiming that if their land ever got up to
twenty-five dollars per acre it would be the top, and they would sell at once,
which many of them did, little dreaming that right here in O'Brien county was a
soil unequalled anywhere on earth, and that in this year of grace 1914 it would
actually sell for one hundred and fifty dollars per acre. The last thousand
dollars of the debt was paid off in the year 1908.


Additional Comments:

Extracted from:

PAST AND PRESENT OF
O'Brien and Osceola Counties, Iowa
BY
HON. J. L. E. PECK and HON. O. H. MONTZHEIMER
For O'Brien County

AND
HON. WILLIAM J. MILLER
For Osceola County

VOL. I

ILLUSTRATED
1914 
B. F. BOWEN & COMPANY, Inc. Indianapolis, Indiana


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