GOVERNMENT LAND POLICY (ISSUE)

The Treaty of Paris of 1783, which brought the Revolutionary War to a close, ceded to the United States an area that became known as the Northwest Territories, and later, the "Old Northwest," which included all lands south of Canada, east of the Mississippi River, and north of the Ohio River. At the time of the treaty the eastern third of the area east of the Mississippi was occupied. The land west of the Appalachian Mountains remained virtually untouched by European settlement until after 1800, when waves of settlers flooded into the area. The Louisiana Purchase in 1804 nearly doubled the size of the country, and the public domain of the United States tripled. Subsequent treaties and purchases continually added new land faster than the sales of the land could diminish it. By 1850 the federal government of the United States held 1.2 billion acres in the public domain.

For Congress, land represented wealth, and the question to be decided was, who should profit from the public domain? One option was to sell the land at full value and retain the wealth for the benefit of the country. Congress could also choose to give the land away and distribute the wealth to those whom it deemed worthy. Before the American Civil War (1861–1865), Congress tended to follow the first option but failed to implement it fully; as a result, the government received only a portion of the value while the rest went to purchasers. After 1862 Congress tended to follow the second strategy, but it again failed to ensure that the policy achieved its goals.

The Federalists (the party of Washington, Hamilton, and John Marshall, who favored a strong central government) viewed the public land primarily as a source of revenue that would give the federal government a chance to expand its role in the economy. For Secretary of the Treasury Alexander Hamilton, the sale of public land at high prices and in large lots would secure the maximum advantage for the public treasury. It would also discourage settlement, limit agricultural expansion, and indirectly encourage manufacturing by turning labor and capital away from the frontier and farming.

But Thomas Jefferson, James Madison, and the Republicans disagreed. They saw the sale of public land as an opportunity to create a nation of small landed farmers that would become the bulwark of democracy and a protection against the arbitrary power of the federal government. Jefferson proposed that the land be sold in small lots and on credit at low prices (if not given away) so that it would fall within the financial means of the largest number of people.

According to the Land Ordinance of 1785, all territory west of the Appalachian Mountains was to be settled in an orderly, systematic fashion. The land was to be surveyed prior to its sale and settlement, and was to be established along a rectangular grid and divided into townships six miles square. In turn, each township was to be subdivided into 36 sections one mile square. The initial terms of the ordinance represented a victory for the Federalists. Prices were set high and the minimum acreage was large. Alternating townships were to be sold whole or by sections consisting of 640 acres. All sales were to be held at public auction in order to ensure that the Treasury obtained the land's full market price as well as its reservation price of $1 per acre.

According to the Northwest Ordinance of 1787, Congress would appoint a governor until a population of five thousand voting-age males could elect its own territorial legislature. When the population reached sixty thousand, the territory could form a state that would be accepted with complete equality among the existing states. The legislation created five states, provided for civil and religious liberties in the respective states, and prohibited slavery within the territory.

Legislators had envisaged an orderly transfer of secure land titles from public to private hands; however, such transfers were often disrupted by eager settlers who already occupied some of the best land in the territory. These "squatters" posed a serious dilemma for government land policy. On the one hand, they contributed to the value of the land by converting it to farmland. On the other hand, they often encroached on the rights of Native Americans, fueling other debates about U.S. policy regarding the Native American population. Moreover, by taking the best properties, squatters made the land unavailable to those who chose to follow federal guidelines. Finally, a system adopted in 1841 allowed squatters to purchase up to 160 acres of land at the minimum price of $1.25 an acre.

In 1854 Congress passed the Graduation Act, which addressed the problem of selling government land surrounded by private property and worth less than the reservation price. The Graduation Act provided for a progressive reduction in the price of unsold public lands to a minimum of 12.5 cents per acre for land that remained unsold for more than 30 years.

On May 20, 1862, President Abraham Lincoln (1861–1865) signed the Homestead Act, which gave settlers who had lived on land five years or more the rights to acquire a full title of 160 acres of land from the public domain. Those eligible would pay only a $10 registration fee. This "free" land for the cultivator seemed to bring America closer to Jefferson's ideal republic—but the reality fell short of the dream. As settlers moved farther west, water became scarce, and the land in general was less suitable for farming. One hundred and sixty acres proved inadequate for family self-sufficiency. Some scholars have argued that the Homestead Act induced many individuals and families to enter farming when they might have found more lucrative employment elsewhere. More liberal homestead acts followed, and between 1863 and 1900 there were close to 1.5 million entries for homesteads. Settlement and agriculture expanded, but western farmers remained disgruntled and eventually soon sought political solutions to their economic problems.

Another aspect of the government land policy was the land subsidies given to the transcontinental railroads that spanned the nation from the 1860s to the end of the nineteenth century. Motivated, as it turned out, by bribes paid by railroad promoters to congressmen as well as by a legitimate appreciation of the potential importance of railroads to the national economy, the Congress not only granted generous loans for construction of the rail lines, it also gave huge grants of land. The government gave the railroad companies not only the right-of-way for the line for free, but for each mile of track, a grant of twenty square miles of land grouped in an alternating checkerboard pattern along the right-of-way. Because of its proximity to the railroad, this land immediately became more valuable. Soon, the state governments were also granting favorable loans and land grants to railroads. By the end of the century, the federal government had given 130 million acres to the railroads, while the states had given an extra 50 million acres. Historians note that in some cases the subsidies exceeded the cost of construction of the rail lines.

The Land Ordinance of 1785 and the Northwest Ordinance of 1787 provided a foundation for the orderly and systematic expansion of the United States through land acquisition and settlement. After its creation in 1812, the General Land Office transferred vast quantities of land from the public domain to private ownership. Government initiatives such as these had a marked and lasting impact upon the division of land and the size distribution of farms throughout the territories to which it applied. By 1860 in the Northeast, farm sizes varied as a result of sales and subdivisions among heirs. In the Midwest, on the other hand, farms were much more consistent in size. For specific states, the impact of land act provisions is apparent in the size distribution data. For example, in Ohio, Indiana, and Illinois, states where settlement occurred when the minimum purchase was 80 acres, 80-acre farms were the model size. In Michigan and Wisconsin, states where settlement occurred after the 1832 revision had cut the minimum purchase to 40 acres, 40-acre farms were the model size.

The impact of these land sales and transfers has generated exhaustive debates among scholars. These kinds of government land policies have often been criticized for inhibiting growth and for being inefficient. Many scholars have argued that sales of land increased too rapidly, bringing too much labor and capital into agriculture and starving manufacturing of these resources. Some have argued that by establishing minimum rather than maximum acreage, the public land policy promoted speculation, concentration of ownership, and tenancy rather than individual small holdings.

But other scholars argue that the release of western land from the public domain induced westward migration and population growth, increased wage rates, increased the gross national product, and redistributed income regionally and between different socioeconomic groups.

See also: Homestead Act, Land Ordinance of 1785, Louisiana Purchase, Northwest Ordinance, Old Northwest