Homestead Act of 1862: America's Grandest Privatization Act

On May 20, 1862, President Abraham Lincoln signed perhaps the greatest privatization act in American history into law, opening 270 million acres of western lands for private and family settlement, and dispensing to American citizens 10 percent of the entire area of the United States. From 1871 to 1951, 1,505,405 homestead patents were processed, and the Homestead Act provided land in the American West until its repeal in 1976. Although distinctly a political act of war, the Homestead Act encouraged the American dream of personal responsibility and right to property independent of government for over 100 years.

Ever since the American War for Independence, the distribution of unsettled frontier lands was a question as ambiguous as it was controversial. Early American boundaries in the frontier arbitrarily reflected odd natural landmarks, which often led to overlapping claims and border disputes between property owners. More structural organization was achieved with the passage of the Land Ordinance of 1785, dividing the frontier into 6-mile square blocks of land called townships, which further subdivided into 36 segments 1 mile (640 acres) each. These very scientific surveys were conducted using astronomical pinpoints, revolutionizing the frontier method for land surveying. After survey divisions were made, the government began selling the 1-mile plots of unsettled land for $1 per acre, an outrageous price considering inflation adjustments and the fact that uncultivated frontier land was often arduous to prepare for farming.

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By 1800, the government began halving the plots for buyers, but the price still remained at $1.25 per acre ($15.57 in 2009 dollars). In 1854, prices were changed to be more reflective of the value of respective properties, and plots that had been for sale for more than five years were cut to 12.5 cents per acre.

During the 1830s and 40s, rises in corn, cotton and wheat prices favored southern plantation owners, and displaced smaller farmers moved west for land. Increasingly, immigrants and eastern laborers also saw the West as a land of opportunity. However, further legislative land privatization reforms were hindered by southern plantation owners who feared that small western farmers would not be able to afford slaves and would be antislavery, and eastern businesses who didn't like the loss of available workers. The Senate accordingly voted down three separate House homestead proposals in 1852, 1854, and 1859, respectively, and in 1860, Congress passed a land grant bill, but President James Buchanan vetoed it.

Then came the American Civil War. By May of 1862, 11 states had left the union, and President Lincoln was somewhat concerned about the progress of the war. Economic resources from the West were all but necessary. General Robert Lee's exquisite tactical leadership, combined with Lee's amazing ability to harness the energy of those under him (Thomas Jackson for one) led the Confederates on to victory in the east. Lincoln feared that the Confederates would push west.

Since the Republican Party had actually been formed in 1854 with the express platform of banning the spread of slavery into the territories, Lincoln had every political incentive to advance individual responsibility by providing for homestead farming in the West. On May 20th, Congress approved and Lincoln signed the Homestead Act in order to foster pro-Union development of the West. The Homestead Act dispensed of free, 640-acre plots of land to those who paid the various filing fees totaling $18, could prove with two witnesses a working farm or other development after five years of a trial period, and who had "never borne arms against the United States Government or given aid and comfort to its enemies." Expressed in 2009 dollars, the Homestead Act disseminated 1-mile acre land plots for a total of $382.26. In 1800, the price for an equivalent western holding shown in 2009 dollars would have been $9,964.80! Where else in the world was land so affordable?

Lincoln could not have imagined the long-term benefits of such privatization on the American economy that reached far beyond the war. Although such individualistic farming in the West was difficult and many homesteaders moved on to another homestead before the five-year maturation date, the Homestead Act fostered a new era of American personal independence and private entrepreneurship.

Homesteaders like the Ingalls family and countless others passed their stories of hard work and morals of family courage onto many generations of Americans, until the settling of the West became almost fundamental to the American spirit. In 1934, the Taylor Grazing Act significantly cut available land for homesteading, and after over 270 million acres had been privatized, Congress finally repealed the Homestead Act in 1976 with a 10-year extension in Alaska. Lincoln's Homestead Act of 1862 turned out to be the greatest large scale privatization success story in America.

Cross-posted from Landmarks of Liberty.