The privatization of the public domain: the Homestead
Nearly one hundred years before Samuelson or Coase, the US Government had to decide what to do with the vast areas west of the Mississippi. Whether to find space for immigrants to settle, finance the states, or built the railway crossing the United States, the government saw land as a resource to be privatized. This national policy culminated in the Homestead Acts, which recently attracted renewed interest from scholars studying its long-run economic consequences (Mattheis & Raz, 2019) or the impacts of land concentration (Smith 2021).
Attempts to pass a nationwide homestead act began in 1846, but only succeeded after southern Democrats left the union in 1862. The original Homestead Act enabled settlers to acquire up to 160 acres for 12 USD up front, and 6 USD after the settler could prove he had “improved” the land during his five years of residency; a bargain compared to outright purchasing the land for 200 USD. As most of the prime agricultural lands were quickly homesteaded, the enlarged Homestead Act of 1909 expanded the number of acres to 320, if farmers accepted more marginal lands.
However, these acts did nothing to solve the underlying problem of the homesteader in the American West. Hundreds of square miles of rangeland were plowed up and marked by deserted shacks and rusty windmills. The human cost was high and the destruction of the range was a tremendous loss to those remaining. What Congress did not realize in their efforts to privatize these lands was that the acreage involved was too small to support a grazing operation, and the land was generally unfit for agricultural farming (Foss, 1960, p. 26).
In 1916, the last homesteading act (Stock-Raising Homestead Act) further enlarged homesteads to 640 acres. While it addressed the limited acreage for marginal lands, it also lured in homesteaders to whom 640 acres sounded a lot of land. These new homesteaders reduced the grazing areas available to existing stockmen and overgrazed all available lands due to their unfamiliarity with their new surroundings, thus further reducing income for stockmen and productivity of already marginal lands (Foss, 1960, p. 27). Thus, the 1916 act did not solve the issue of overgrazing; it made it worse.