by Ryan McMaken, Mises Institute
In American political discourse, the Homestead Acts remain so widely regarded as a success, that merely mentioning them will often suffice to provide evidence of how government deserves credit for being wise, prudent, and devoted to taking the long view in economic development.
A recent example comes from Concrete Economics: The Hamilton Approach to Economic Growth and Policy, a 2016 book by influential economists Stephen Cohen and Bradford DeLong. The purpose of Cohen and DeLong’s book is to illustrate the limitations of the private marketplace and the need for government intervention to “reinvigorate” the economy throughout American history.
An Example of Activist Government?
Cohen and DeLong employ the Homestead Acts as just one example of many illustrations of the need for government planning:
This was a grand exercise in social design, implementing Jefferson’s vision of a nation of independent farmers — of yeomen, not laborers. And it was fundamentally and deliberately different from what total is generally considered to be the normal and right way to dispose of government assets: sell them to the highest bidder.
As David Gordon pointed out in his review of Concrete Economics, it’s odd to seize on a case of land privatization as an example of activist government. Nevertheless, to a certain extent, the Homestead Acts do contain elements of activist government because, after all, the Homestead Acts created what can only be described as a government program governed by rules and regulations. While the Acts led to privatization of government lands, they nonetheless did so in a manner subject to manipulation and regulation by federal agencies. And, it should surprise no one that this government-run privatization program failed to take into account the unique geographic realities of the frontier. In turn, this ineptitude on the part of Congress led to numerous problems of fraud, economic bust, and social disintegration.
How the Homestead Acts Were Poorly Designed
The biggest problem with the Homestead Acts was the fact that the size of the homesteads — 160 acres — was far too small to allow for the landowners to succeed as independent farmers.
In the 19th century, very few members of Congress had any understanding at all of the geographic realities of the trans-Mississippi west. Especially problematic was that west of the hundredth meridian, the climate is much drier than it is in the eastern US. Congress simply assumed that what had worked for farmers in Ohio would work equally well in Montana.
In reality, the climate and altitude allowed for shorter growing seasons and low-value crops that yielded nowhere near the exchange value that cold be easily grown further east. 160 acres was also grossly insufficient for grazing stock. With so little precipitation, crops required irrigation which further added to problems in a land-distribution system based on small self-sufficient lots.
Consequently, countless homesteads were abandoned and families who had sacrificed their careers back east to move west ended up losing everything. The Great Dakota boom — and subsequent bust — for example, produced countless ghost towns and abandoned homesteads in the wake of failed frontier speculation on presumably easy-to-farm homesteads. It is estimated that by 1900, only 52% of homesteaders were able to take legal title to the land, meaning nearly half of those who had attempted to homestead failed.
Moreover, the extent to which the Homestead Acts provided land to settlers tends to be greatly exaggerated.
Cohen and DeLong proudly remind us that “over 1.5 million homesteads were granted, totaling some 270 million acres.”
These numbers are supposed to impress us, but if we look at the total size of the western states, we’re not so impressed after all.
If we add up all the acreage in the Western states, including Texas, we find it totals over 1.5 billion acres, and thus 270 million acres is only a small fraction of that.1 But, to be fair, let’s exclude Texas since much of state state was already settled before the Homestead Acts were adopted. In that case, we find the total acreage of the region was still over 1.3 billion acres. If we want to be even more conservative, we can exclude Alaska. In that case, the region still totals over 945 million acres. So, even by very conservative estimates, we find that homesteaded land comprised only 28 percent of frontier lands. If Alaska is included (but not Texas) the percentage falls to 19 percent.
Who got the rest of the land? Much of it was simply taken over by the federal government, which today owns more than 625 million acres (including Alaska) — more than double the land homesteaded — in the western states alone. The Homestead Act was so inflexible and so geared toward naively promoting small-plot farming, that few people even attempted to settle many of the more mountainous and desert-like areas of the West. Those who did settle these areas were forced to use scams and fraud to assemble large plots, which was the only way to make land-use sustainable. The rest was taken over by railroads and other large corporations that obtained the land through cronyist deals with Congress.
Poor Land-Use Practices
Also problematic with the Homestead Acts was the way the plots were laid out. The Homestead Act envisioned a patchwork of rectangular plots known as “quarter sections.”
This may seem trivial to many, but in practice, the shape of the plots can be significant in shaping settlement patterns, markets, and social interaction. Many European settlers and farmers in Europe had long since realized that, whenever possible, farms should be laid out in a manner that limits the social and geographic isolation of the farmers themselves. Daniel Boorstin described the problem with rectangular farms in his book The Americans:
[The rectangular plots] gave a character to American farm life every different from that of the Old World peasant, who lived in a village and then went out every day to the plots that he cultivated. Even if every homestead had had no more than a quarter section (160 acres) and every quarter-section was actually homesteaded, under the rigid rectangular system of surveying public lands for sale, the average distance between farmhouses would still be at least a half-mile. But many settlers had larger tracts, some sections were reserved for schools, and there were large unsettled areas that had been avandoned by Eastern speculator — all of which separated a homesteading farmer from his neighbors.
Back in Europe, farmers and landowners dealt with these issues by employing so-called ribbon farms, also known as “long-lot” plots. These were plots of land laid out in a long, thin shape that allowed numerous settlers to live closer to each other. The shape of plots also made farming more efficient by allowing for longer rows requiring fewer turns for heavy and cumbersome equipment and animals.
This situation had many implications for self-defense as well. Those settlers who lived near Indian reservations, for example, remained spread out and relatively defenseless. If Indian raiders or criminals targeted a specific farm, the homesteaders were often too far from other farmers to sound the alarm or seek help. Ribbon farms, by contrast, were also advantageous in terms of self defense since they allowed for faster communication and for greater ease in mounting a collective defense against threats.
In his history of Illinois settlement James E. Davis notes how ribbon farms allowed farmers to live closer together in recognizable communities:
Social benefits also accrued to this system. Although some French farmers in French Canada and Louisiana lived in farming villages like Europeans and walked to their long-lot fields, most lived on farmsteads. … Connecting paths and then roads ran along the far ends of their ribbon farms. In northern regions, winter witnessed sleds hauling bulky loads on frozen waterways. Shortened winter workdays encouraged evening socializing with people visiting via frozen waterways and roads. Communications was relatively easy and frequent, fostering community, cohesion, and safety.
The physical and social isolation forced on settlers by the provisions of the Homestead Acts had psychological effects as well. The editor of Northwest Illustrated Monthly Magazine, E.V. Smalley, explained the situation in 1893:
These people came from cheery little farm village. Life in the fatherland was hard and toilsome, but it was not lonesome. Think for a moment how great the chalnge must be from white-walled, red-roofed village on a Norway fiord, with its church and schoolhouse … to a Dakota prairie, and say if it is any wonder that so many Scandinavians lose their mental balance…
Neighborly calls are infrequent because of the long distances which separate the farmhouses, and because, too, of the lack of homogeneity of the people. The have no common past to talk about… An alarming amount of insanity occurs in the new prairie States among farmers and their wives.2
Relocating to a new country has always been difficult, but the nature of the Homestead Acts made it more so, thus compounding the already geographically and economically inappropriate nature of the program’s provisions.
Did the Homestead Acts Make America Wealthy?
Also unproven is the long-held claim that the homestead acts, and the manner in which they distributed land, was key in making the United States more prosperous and egalitarian in the late 19th and early 20th centuries.
Cohen and DeLong claim that without the Homestead Acts, the western US would look like “Old Russia” or Latin America in that it would be a nation of laborers instead of property owners. (This is assumed to be bad.) The implication here is that the Homestead Act’s method of distributing land made the US more prosperous than Latin America.
It’s hard to see, however, how the Homestead Act can be credited with the relative wealth of the United States.
For an illustration of this, we can look to Argentina, which was remarkably similar to California in the late 19th century. As noted by Richard White in his book Railroaded, a potential migrant from Europe to the New World in the late 19th century would have had a hard time deciding between California and Argentina. Both areas were experiencing rapid economic growth, and both areas offered large numbers of jobs open to immigrants.
Indeed, by 1900, Argentina was quickly becoming one of the richest countries in the world. The Economistsummed it up:
In the 43 years leading up to 1914, GDP had grown at an annual rate of 6%, the fastest recorded in the world. The country was a magnet for European immigrants, who flocked to find work on the fertile pampas, where crops and cattle were propelling Argentina’s expansion. In 1914 half of Buenos Aires’s population was foreign-born.
The country ranked among the ten richest in the world, after the likes of Australia, Britain and the United States, but ahead of France, Germany and Italy. Its income per head was 92% of the average of 16 rich economies. From this vantage point, it looked down its nose at its neighbours: Brazil’s population was less than a quarter as well-off.
Argentina did all of this without any programs similar to the Homestead Acts. While there were some efforts to diversify land ownership, there was nothing that could be called a Homestead Act “equivalent” as had been the case with the Dominion Lands Act in Canada.
However, wages grew quickly in Argentina for both agricultural workers and city workers. This is both why the country attracted so many immigrants, and why politicians attempted to bring down wages by actively subsidizing importation of additional labor.
The fact that Argentina would eventually reverse its growth path and fall behind other wealthy nations can hardly be blamed on its lack of land distribution along the lines of a Homestead Act. Indeed, protectionist trade policy and economic interventionism under a series of anti-free market administrations, including that of Juan Perón, are fairly obvious culprits behind Argentina’s decline.
So, when advocates for more government planning resort to paeans about the Homestead Acts, we’d be wise to bring along a bit of skepticism. To see the evidence of the Acts’ shortcomings, we need look no further than the fact that the US government now owns far more land than it ever distributed to homesteaders.
From the government’s point of view, of course, the program was a success. It encouraged primarily white settlers with American citizenship to move to thinly-populated states, thus encouraging exclusion of Canadians, Indians, and Mexicans with foreign allegiances. The program also provided a political advantage to the Republican Party which ran on a platform of free giveaways in 1860 and encouraged voters to “vote yourself a farm.”
Contrary to what Cohen and DeLong’s arguments imply, areas where land was distributed by more simple land-sales schemes — such as the Land Ordinance of 1785 — did not turn into anything resembling Russia. Ohio and Wisconsin, for example, where settlement predated the Homestead Acts, hardly turned into feudal states.
Unfortunately, critical views of the Homestead Acts are just another casualty of the idealization of the frontier in which it is assumed that anyone willing to put in a little hard work could become a prosperous land owner. In practice, the Homestead Acts set the stage for multiple land-based booms and busts, many instances of corporate fraud, and the eventual federal takeover of more than 600 million acres that Congress had originally intended for privatization.
This post was originally published at Mises.org and is reposted here under a CreativeCommons, Non-Commericial 3.0 license.