(An American Tragedy)

Donald K. Muschany


Canceling The Land Options

     By March 8, 1941, a total of 129 options had been paid for and another 149 options and contracts had been accepted by the Government as previously indicated by my Uncle and Aunt’s Land Option.
     On March 8, 1941, the Associated Press carried the following front page news under the caption “TNT Land Options Canceled.” The article is hereby reproduced:

     “The War Department announced today it had decided to cancel unexercised options obtained for the government by R. Newton McDowell of Kansas City, Mo., in connection with acquisition of 16,394 acres for a TNT plant at Weldon Springs, Missouri.
     It added that proceedings for condemnation of land covered by the unexercised options would be started immediately.
     ‘An investigation indicates,’ said a formal statement by the Land Acquisition Division, ‘that a number of the option prices are grossly excessive.’
     ‘The War Department still has under consideration options which have been exercised.’

     McDowell holds a War Department contract to arrange for purchase of the land at a 5 per cent fee.
     McDowell declared tonight options had been accepted by the War Department on all but about 400 acres.
     McDowell, saying he did not know just what the department meant by ‘unexercised options,’ told newsmen he had obtained options and forwarded them to the War Department for signature and a return of copies to land owners.
     ‘That is a contract under which the government agrees to pay the farmer.’ he said. ‘Do they intend to repudiate these obligations?’

     McDowell, after the department decision was announced, told newsmen that of the options he said were signed by the War Department and not yet paid for, approximately 90 per cent had resulted in deeds being executed to the government by farmers. He asserted approximately $1,500,000 was due on the options he said had been approved and added;
     ‘I acquired the land under instructions of the War Department and the policies as laid down by the Secretary of War and the National Defense Commission. If the War Department wishes to repudiate those things that is beyond my control.’
     McDowell said that when he was asked if he would consider reducing his fee from 5 per cent to 3½ per cent he replied that several departments, including the Attorney General’s office had representatives on the project since last October and knew about the 5 per cent contract during ‘all that period.’

     “I didn’t care to argue with the government over fees, he said, ‘but in view of the fact the Attorney General had been in on the acquisition of the property since the beginning I didn’t see the necessity of picking on me and a few farmers in Missouri at this late date.
     The department’s announcement followed a conference yesterday in which John J. O’Brien, a Justice Department attorney now in charge of land acquisition for the War Department, took part.
     Other conferees were Ewing Wright, special attorney for the Justice Department, and District Attorney Harry C. Blanton of St. Louis, here as an ‘unofficial observer.’
     Wright recently went to St. Charles County, Mo., in which the land is located, to obtain information on new appraisals and assessed valuations for the tract.

     A War Department spokesman estimated the value of the unexercised options at $1,375,000. Approximately 270 parcels of land comprise the tract the government is acquiring and options on 121 of these have been accepted.
     Estimated cost of acquiring the land had been fixed at from $2,500,000 to $3,000,000 but complaints were made from undisclosed sources that the figure was too high. O’Brien then began a recheck. the government originally had expected the cost of the tract would be about $2,000,000.
     No statement was given here as to Wright’s report.
     The War Department statement said:
     ‘The War Department announced today after extended negotiations it had been unable satisfactorily to revise the commission of Mr. R. Newton McDowell of Kansas City in connection with acquisition of land for the ordnance TNT plant at Weldon Springs, St. Charles County, Mo.
     ‘As previously announced, the War Department has succeeded in lowering to approximately 3½ per cent of the gross cost of the land optioned commissions payable to agents similarly engaged in obtaining options on other defense projects.
     ‘Mr. McDowell’s arrangements provided for payment of a 5 per cent commission by the landowner. In addition the landowner was to be charged 1½ per cent for title work.
     ‘The War Department has determined to cancel the unexercised options obtained by Mr. McDowell. An investigation indicates that a number of the option prices are grossly excessive. Proceedings for the condemnation of the land covered by the unexercised options will be instituted immediately.
     ‘The War Department still had under consideration options which have been exercised.’
     McDowell said at yesterday’s conference that he believed it would cost the government $1,000,000 more than his total cost estimate of $2,500,000 if it condemned the land, and said his figures covered also cost of two towns and school properties.
     A conferee said McDowell was asked if he were willing to take a 3½ per cent commission and that he pointed out his contract already had been made for 5 per cent.

     Many St. Charles landowners yesterday indicated they will go to court in an effort to enforce their unexercised land options with the government as binding contracts.
     R. Newton McDowell, on a recent visit to St. Louis, hinted at the same intention when he said, ‘they can’t do it legally,’ referring to the War Department’s proposal to acquire the TNT plant by condemnation rather than carry out options McDowell already has acquired.
     St. Charlesans based their court fight plans on a Supreme Court decision of several years ago in which they said an option on some Southeast Missouri land was upheld as an enforceable contract.
     Birch O. Mahaffey, St. Louis lawyer, who holds power of attorney on approximately 250 acres of the site land involved, said he would ‘have to study’ the War Department’s decision before laying out his course of action.
     ‘I wasn’t too happy about the option system at the start,’ he said.

     As indignation in the St. Charles area mounted yesterday, a survey revealed more than 100 farmers are threatened with heavy financial loss if payment on options is delayed or refused by the government.
     Of 147 owners whose option price is still unpaid, approximately two-thirds meanwhile have bargained for new farms and homesites, paying down a sum of earnest money, in most cases 10 per cent of the purchase price, taken from their savings or borrowed. Most agreements provide the balance is to be paid when the government pays the TNT plant options.
     Most of the individual options will expire within 30 days, farmers disclosed, since that is the time they said McDowell’s agents told them the government payments were likely to be forthcoming.
     Worried farmers now find themselves innocently caught in a squeeze play that may cost them their earnest money if the sellers refuse refunds or time extensions.
     The 147 unpaid parcels represent a price of $1,519, 475 and include 35 parcels on which the government had approved a $370,921 cost but held up payment until the recent recheck by the Justice Department was completed.”