The Yazoo land scandal, Yazoo fraud, Yazoo land fraud, or Yazoo land controversy was a massive fraud perpetrated from 1794 to 1803 by several Georgia governors and the state legislature. They sold large tracts of land in what is now the state of Mississippi to political insiders at very low prices. Although the law enabling the sales was overturned by reformers, the land claims were challenged in the courts for years, reaching the US Supreme Court. In the landmark decision, Fletcher v. Peck (1810), the Court ruled that the contracts were binding and the state could not retroactively invalidate the earlier land sales. It was one of the first times the Court had overturned state law.
The Yazoo land fraud is often conflated with the Pine Barrens speculation. This involved Georgia's high-ranking officials making multiple gifts of grants of land for the same parcels, grants amounting to three times more land than existed in the state of Georgia. This real estate speculation occurred about the same time as that in Mississippi.
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The Yazoo land scandal had two chapters. It had its origin in 1785, soon after the United States' victory in the American Revolutionary War. Pent-up land hunger meant that settlers were eager for new territory. Governor George Mathews signed the Bourbon County Act, which organized Bourbon County, Georgia in the area of the Mississippi and Yazoo rivers. This area included the site of the present-day city of Natchez, Mississippi. At the same time, a secret society called the Combined Society was formed; the members' sole purpose was to make money by land speculation. They wanted to acquire land at low prices for resale, and used influence with politicians to accomplish that end.
Georgia appointed civil and judicial officers for the new county, but under pressure from the U.S. government, Georgia dissolved Bourbon County in 1788. The U.S. government opposed Bourbon County for several reasons. At the time, a portion of the land was also claimed by Spain, and claims to the area by the Choctaw and Chickasaw Native American tribes had not been extinguished. The Combined Society eventually faded away.
The second chapter began in 1789 when three companies, The South Carolina Yazoo Company, The Virginia Yazoo Company, and the Tennessee Company were formed to buy land from the Georgia legislature. Governor Telfair signed a deal to sell 20,000,000 acres (81,000 km2) of land to the Yazoo companies for $207,000, or about 1 cent per acre. The deal fell through when the companies attempted to pay with worthless old currency. The Virginia Yazoo Company was headed by Patrick Henry.
In 1794, four new companies: the Georgia Company, the Georgia-Mississippi Company, the Upper Mississippi Company, and the new Tennessee Company, persuaded the Georgia state assembly to sell more than 40,000,000 acres (160,000 km2) of land for $500,000. Many Georgia officials and legislators were to be stockholders in these companies. On January 7, 1795, Governor George Mathews signed into law a bill authorizing the sale of the 40,000,000 acres (160,000 km2), known as the Yazoo Act.
When the details were revealed, public outrage was widespread, and people protested to federal officials and Congressmen. Jared Irwin and U.S. Senator James Jackson led the reform efforts: Irwin was elected Governor of Georgia and, less than two months after taking office, signed a bill on February 13, 1796 nullifying the Yazoo Act. The state burned all copies of the bill except for one that had been sent to President George Washington. Jackson resigned as Senator to run for office as next Governor of Georgia. He was elected and took office two years later.
But the matter was not over. The state refunded money to persons who had purchased land, but some refused the money, preferring to keep the land. The state did not recognize their claims, and the matter was to wind through courts for the next decade. In 1803 the state ceded to the U.S. all claim to lands west of its present border, along with the legal disputes.
The matter reached the U.S. Supreme Court in 1810. In the landmark Fletcher v. Peck decision, one of the first times the Court overturned a state law, the Court ruled that the land sales were binding contracts and could not be retroactively invalidated by the state by passage of superseding law.
During the same period, in what was called the Pine Barrens speculation, the governors and legislature of Georgia made overlapping land grants, effectively granting three times more land than existed in the state. Although land grants were supposed to be limited to 1,000 acres (4 km2) per individual, the state awarded multiple grants of 1,000 acres (4 km2) to certain persons.