Expansion
Prior to the conclusion of the Revolutionary War, there was little need for mortgage bankers. Colonial governments often granted land to farmers, and tradesmen typically started businesses with the tools they brought with them from England or Europe. If funds were needed to establish a business or expand a farm, individuals typically borrowed from a relative or a wealthy community member. Over the next century, land acquisition became more complicated as the nation moved west.
Victory over the British had resulted in much more than political independence for the fledgling United States. Victory also moved the western border of the new nation far beyond the original thirteen colonies. The 1783 Treaty of Paris demanded that Britain cede the trans-Appalachian West, all of the land between the Appalachian Mountains and the Mississippi River, to the United States. Americans were able to leave the crowded cities along the eastern seaboard to establish new towns and businesses in the interior. More important, the land was perfect for agriculture, the economic foundation of the country. Some farmers in the East vacated their marginal farms to move across the mountains. And many second sons, denied land inheritance by the legal tradition of primogeniture, took advantage of the opportunity to establish their own farms, especially in the fertile region of what became the Northwest Territory, or Old Northwestāthe lands north of the Ohio River.
To facilitate expansion and settlement, under the powers granted by the Articles of Confederation, the Continental Congress passed the Land Ordinance of 1785, which ordered the survey and division of the land into a uniform grid system. The system enabled verifiable legal descriptions for each plot of land, minimizing land ownership disputes and laying a foundation for mortgage lending. Once surveyed, the federal government sold the land, thus generating revenue to govern the newly established nation. Even though the Native Americans who had lived in trans-Appalachia for centuries contested American expansion, by the early 1800s the region was bustling with American immigrants.1
A few years later, in 1803, the purchase of what was then called Louisiana, virtually all of the land from the Mississippi to the Rocky Mountains, nearly doubled the size of the country. In the eyes of President Thomas Jefferson and his supporters, possession of this enormous tract of land assured the fledgling country that it would not succumb to overpopulation and economic stagnation. However, not until several events occurred during the late 1840s did a surge of settlement spread westward. The first was the ratification of a treaty with Great Britain in 1846 that gave sole possession of Oregon Country to the United States.2 Suddenly, the nationās northern tier extended from the Atlantic to the Pacific. Two years later, the military victory over Mexico in the Mexican-American War moved the border to include most of what is now known as the American Southwest and California. When combined with Texas, annexed by the United States in 1845, and the Oregon Country to the north, the nation became truly continental in scope.
But the discovery of gold in California in late 1848 was what really spawned the movement of large numbers of immigrants to the West. Following the California Gold Rush, additional discoveries of gold and silver induced others to seek their fortunes in Nevada, Colorado, and other areas of the West. On the heels of the miners came entrepreneurs who developed towns and cities such as Denver that supported the miners, providing them with desperately needed supplies and various services, from blacksmiths to laundries. As the towns and cities of the West developed, farmers from the East and from Europe began to arrive, ready to claim and cultivate lands made available through the Homestead Act passed by the US Congress in 1862. Settlement of the West exploded during the second half of the nineteenth century.
Yet the federal government did not possess clear title to much of the land the farmers wanted. Native American peoples still controlled some of the best agricultural lands. The government would have to negotiate treaties with numerous tribes and in many cases force them onto reservations located on less desirable lands. An example is the Osage Nationās claim on a large segment of southeastern Kansas. On September 29, 1865, government officials finalized negotiations with tribal representatives to acquire their āsurplus lands,ā allowing official surveys to proceed. But the treaty stipulated that the bulk of the land was to be sold and therefore was not available for homesteading. Government surveys were crucial to providing land titles based on accurate legal descriptions, a necessary component for granting and selling property and for mortgage lending.3
Congress envisioned the Homestead Act and its legislative partners, the Pacific Railway Act and the Morrill Act passed and enacted in 1862, as tools to expand Americaās capitalist agrarian economy. Through the Homestead Act, the federal government gave 160 acres of land at no cost to individuals who agreed to live on and develop the land for productive use for a period of five years. At the end of the five-year term they would receive title to the land. Settlers could also exercise the option to purchase the land outright at a discounted rate of only $1.25 per acre after just six months of occupancy. Like the Land Ordinance of 1785, the Homestead Act was designed to draw the poor, the unemployed, and the children of farmers in the East to the trans-Mississippi West, transforming them into prosperous, independent farmersāthe ideal of a republican society.
The Pacific Railway Act attempted to achieve two goalsāfirst, to establish a transcontinental railway system to connect the East and West Coasts and second, to provide rail service to the newly established farm communities in the West so they could readily transport their produce to distant markets across the nation and the globe. The federal government subsidized the railroads by granting them title to up to ten acres of land for every mile of track they laid. Later amendments increased that amount to forty acres. Congress anticipated that the railroad companies would sell the granted lands, all located adjacent to the tracks, to prospective farmers. The funds raised would help finance railroad construction while providing those same farmers with ready access to the railroad networks that would transport their goods to market and bring manufactured goods to them while at the same time enabling mortgage bankers to invest in new farming and ranching communities.4
The third component, the Morrill Act, granted public lands to individual states for the express purpose of raising funds to finance the establishment of higher education institutions that would develop agricultural and mechanical/engineering curriculums in addition to other sciences and traditional liberal arts programs. Known as land-grant colleges, they specialized in research to advance agricultural practices in an effort to increase the productivity and profitability of Americaās farmers. In combination, these three statutes created a framework to develop a robust and prosperous agriculturally based economy in the West, at least in theory.
One of the crucial factors the crafters of the Homestead Act failed to consider was the arid climate that engulfed much of the West. The farming knowledge and methods most settlers brought with them were adapted to the humid climate east of the Mississippi River. Efforts to apply that expertise to the arid West without supplemental irrigation proved disastrous. Without irrigation, 160 acres of land was insufficient to generate enough food for subsistence, let alone a profit. As a result, almost half of all farms established under the act failed and were abandoned before the end of the five-year occupancy requirement, the farmers never having secured title to the land. In addition, the Homestead Act failed to address the needs and practices of cattle and sheep ranching. Ranchers typically did not cultivate the land as required by the law and needed much more than the allotted 160 acres of land to support a viable, productive herd.
Mining also lured men to Colorado. In 1858, about ten years after the California Gold R...
