EXTENT OF THE PUBLIC DOMAIN.
ACCORDING to the latest report of the Commissioner
of the General Land Office, the public domain not yet disposed of amounted
on the 30th of June, 1870, to 1,387,732,209 acres.
These figures are truly enormous, and paraded
as they always are whenever land enough for a small empire is asked for
by some new railroad company, or it is proposed to vote away a few million
acres to encourage steamship building, it is no wonder that they have a
dazzling effect, and that our public lands should really seem "practically
inexhaustible." For this vast area is more than eleven times as large
as the great State of California; more than six times as large as the united
area of the thirteen original States; three times as large as all Europe
outside of Russia. Thirteen hundred and eighty-seven millions of acres!
Room for thirteen million good-sized American farms; for two hundred million
such farms as the peasants of France and Belgium consider themselves rich
to own; or for four hundred million such tracts as constituted the patrimony
of an ancient Roman! Yet when we come to look closely at the homestead possibilities
expressed by these figures, their grandeur begins to melt away. In the
first place, in these 1,387,732,209 acres are included the lands which
have been granted, but not yet patented, to railroad and other corporations,
which, counting the grants made at the last session, amount to about 200,000,000
acres in round numbers; in the next place, we must deduct the 369,000,000
acres of Alaska, for in all human probability it will be some hundreds if
not some thousands of years before that Territory will be of much avail
for agricultural purposes; in the third place, we must deduct the water
surface of all the land States and Territories (exclusive of Alaska), which,
taking as a basis the 5,000,000 acres of water surface contained in California,
cannot be less than 80,000,000 acres, and probably largely exceeds that
amount. Still further, we must deduct the amount which will be given under
existing laws to the States yet to be erected, and which has been granted,
or reserved for other purposes, which in the aggregate cannot fall short
of 100,000,000 acres; leaving a net area of 650,000,000 acres—less than
half the gross amount of public land as given by the Commissioner.
When we come to
consider what this land is, the magnificence of our first conception is
subject to still further curtailment. For it includes that portion of the
United States which is of the least value for agricultural purposes. It
includes the three greatest mountain chains of the continent, the dry elevated
plains of the eastern slope of the Rocky Mountains and the arid alkali-cursed
stretches of the great interior basin; and it includes, too, a great deal
of land in the older land States which has been passed by the settler as
worthless. Colorado, Wyoming, Utah, Nevada, Idaho, Montana, New Mexico
and Arizona, though having an abundance of natural wealth of another kind
probably contain less good land in proportion to their area than any other
States or Territories of the Union, excepting Alaska. They contain numerous
valleys which with irrigation will produce heavy crops, and vast areas of
good grazing lands which will make this section the great stock range of
the Union; but the proportion of available agricultural land which they contain
is very small.
Taking everything into consideration, and
remembering that by the necessities of their construction the railroads
follow the water courses and pass through the lowest valleys and therefore
get the best land, and that it is fair to presume that other grants also
take the best, it is not too high an estimate to assume that, out of the
650,000,000 acres which we have seen are left to the United States, there
are at least 200,000,000 acres which for agricultural or even for grazing
purposes are absolutely worthless, and which if ever reclaimed will not
be reclaimed until the pressure of population upon our lands is greater
than is the present pressure of population upon the lands of Great Britain.
And, thus, the 1,387,732,209 acres which make
such a showing in the Land Office Reports come down in round numbers to
but 450,000,000 acres out of which farms can be carved, and even of this
a great proportion consists of land which can be cultivated only by means
of irrigation, and of land which is only useful for grazing.
This estimate is a high one. Mr. E. T. Peters,
of the Statistical Bureau, estimates the absolutely worthless land at 241,000,000
acres. Senator Stewart, in a recent speech, puts the land fit for homes
at one third of the whole—332,000,000 acres by his figuring, as he makes
no deductions except for Alaska and the Texas Pacific grant. Assuming his
proportion to be correct, and admitting that the railroads, etc., take
their proportion of the bad as well as of the good land, we would have,
after making the proper deductions, but 216,000,000 acres of arable land
yet left to the United States.
But taking it at 450,000,000 acres, our present
population is in round numbers 40,000,000, and thus our "limitless domain,"
of which Congressmen talk so much when about to vote a few million acres
of it away, after all amounts to but twelve acres per head of our present
OUR COMING POPULATION.
BUT let us look at those who are coming.
The amount of our public land is but one factor; the number of those for
whose use it will be needed is the other. Our population, as shown by the
census of last year, is 38,307,399. In 1860 it was 31,443,321, giving an
increase for the decade of 6,864,078, or of a fraction less than twenty-two
per cent. Previous to this, each decade had shown a steady increase at the
rate of thirty-five per cent., and this may be considered the rate of our
normal growth. The war, with its losses and burdens, and the political,
financial and industrial perturbations to which it gave rise, checked
our growth during the last decade, but in that on which we have now entered,
there is little doubt that the growth of the nation will resume its normal
rate to go on without retardation, unless by some such disturbing influence
as that of our great Civil War, until the pressure of population begins to
approximate to the pressure of population in the older countries.
Taking, then, this
normal rate as the basis of our calculation, let us see what the increase
of our population for the next fifty years will be:
In Our population will be
an increase in that decade of
1880 ........ 51,714,989
1890 ........ 69,815,235
1900 ........ 94,250,567
1910 ........ 127,238,267
1920 ........ 171,771,610
This estimate is a low one. The best estimates
heretofore made give us a population of from 100,000,000 to 115,000,000
in 1900, and from 185,000,000 to 200,000,000 in 1920, and there is little
doubt that the Census of 1870, on which the calculation is based, does
not show the true numbers of our people. But it is best to be on the safe
side, and the figures given are sufficiently imposing. In truth, it is
difficult to appreciate, certainly impossible to overestimate, the tremendous
significance of these figures when applied to the matter we are considering.
By 1880, the end of the present decade, our
population will be thirteen millions and a half more than in 1870that
is to say, we shall have an addition to our population of more than twice
as many people as are now living in all the States and Territories west
of the Mississippi (including the whole of Louisiana), an addition in
ten years of as many people as the re were in the whole of the United States
By 1890 we shall have added to our present
population thirty-one and a half millions, an addition equal to the present
population of the whole of Great Britain.
By the year 1900—twenty-nine years off—we
shall have an addition of fifty-six millions of people; that is, we shall
have doubled, and have increased eighteen millions beside.
By 1910, the end of the fourth decade, our
increase over the population of 1870 will be eighty-nine millions, and by
1920 the increase will be nearly one hundred and thirty-four millions; that
is to say, at the end of a half century from 1870 we shall have multiplied
four and a half times, and the United States will then contain their present
population plus another population half as large as the present population
of the whole of Europe.
What becomes of our accustomed idea of the
immensity of our public domain in the light of these sober facts? Does our
450,000,000 acres of available public land seem "practically inexhaustible"
when we turn our faces towards the future, and hear in imagination, in the
years that are almost on us, the steady tramp of the tens of millions, and
of the hundreds of millions, who are coming?
Vast as this area is, it amounts to but thirty-three
acres per head to the increased population which we will gain in the present
decade; to but fourteen acres per head to the new population which we
will have in twenty years; to but four acres per head to the additional
population which we will have by the close of the century!
We need not carry the calculation any further.
Our public domain will not last so long. In fact, if we go ahead, disposing
of it at the rate we are now doing, it will not begin to last so long, and
we may even count upon our ten fingers the years beyond which our public
lands will be hardly worth speaking of.
Between the years 1800 and 1870 our population
increased about thirty-three millions. During this increase of population,
besides the disposal of vast tracts of wild lands held by the original States,
the Government has disposed of some 650,000,000 acres of the public domain.
We have now some 450,000,000 acres of available land left, which, in the
aggregate, is not of near as good a quality as that previously disposed of
some 650,000,000 acres of available land left, which, in the aggregate, is
not of near as good a quality as that previously disposed of. The increase
of population will amount to thirty-two millions in the next twenty years!
Evidently, if we get rid of our remaining public land at the rate which we
have been getting rid of it since the organisation of the General Land Office,
it will be all gone some time before the year 1890, and no child born this
year or last year, or even three years before that, can possibly get himself
a homestead out of Uncle Sam's farm, unless he is willing to take a mountain-top
or alkali patch, or to emigrate to Alaska.
But the rate at which we are disposing of
our public lands is increasing more rapidly than the rate at which our
population grows. Over 200,000,000 acres have been granted during the
last ten years to railroads alone, while bills are now pending in Congress
which call for about all there is left. And as our population increases,
the public domain becomes less and less, and the prospective value of land
greater and greater, so will the desire of speculators to get hold of land
increase, and unless there is a radical change in our land policy, we may
expect to see the public domain passing into private hands at a constantly
increasing rate. When a thing is plenty, nobody wants it; when it begins
to get scarce, there is a general rush for it.
It will be said: Even if the public domain
does pass into private hands, there will be as much unoccupied land as there
otherwise would be, and let our population increase as rapidly as it may,
it will be a long time before there can be any real scarcity of land in
the United States. This is very true. Before we become as populous as France
or England, we must have a population, not of one hundred millions or two
hundred millions, or even five hundred millions; but of one thousand millions,
and even then, if it is properly divided and properly cultivated, we shall
not have reached the limit of our land to support population. That limit
is far, far off—so far in fact that we need give ourselves no more trouble
about it than about the exhaustion of our coal measures. The danger that
we have to fear, is not the overcrowding, but the monopolization of our land—not
that there will not be land enough to support all, but that land will be
so high that the poor man cannot buy it. That time is not very far distant.
THE PROSPECTIVE VALUE OF LAND.
SOME years ago an Ohio Senator asserted
that by the close of the century there would not be an acre of average
land in the United States that would not be worth fifty dollars in gold.
our present land policy is to be continued, if he was mistaken at all, it
was in setting the time too far off.
Between the years 1810 and 1870, the increase
in the population of the United States was no greater than it will be
between the years 1870 and 1890. Coincident with this increase of population
we have seen the value of land go up from nothing to from $20 to $150 per
acre over a much larger area than our public domain now includes of good
And as soon as the public domain becomes nearly
monopolized, land will go up with a rush. The Government, with its millions
of acres of public land, has been the great bear in the land market. When
it withdraws, the bulls will have it their own way. That there is land
to be had for $2.50 per acre in Dakota lessens the value of New York farms.
Because there is yet cheap land to be had in some parts of the State, land
in the Santa Clara and Alameda valleys is not worth as much.
And in considering the prospective value of
land in the United States, there are two other things to be kept in mind:
First, that with our shiftless farming we are exhausting our land. That
is, that year by year we require not only more land for an increased population,
but more land for the same population. And, second, that the tendency of
cheapened processes of manufacture is to increase the value of land.
LAND POLICY OF THE UNITED STATES
THE best commentary upon our national land
policy is the fact, stated by Senator Stewart, that of the 447,000,000
ACRES disposed of by the Government, not 100,000,000 have passed directly
into the hands of cultivators. If we add to this amount the lands which
have been granted, but not delivered, we have an aggregate of 650,000,000
acres disposed of to but 100,000,000 acres directly to cultivators—that
is to say, six sevenths of the land have been put into the hands of people
who did not want to use it themselves, but to make a profit (that is, to
exact a tax) from those who do use it.
A generation hence our children will look
with astonishment at the recklessness with which the public domain has
been squandered. It will seem to them that we must have been mad. For certainly
our whole land policy, with here and there a gleam of common sense shooting
through it, seems to have been dictated by the desire to get rid of our lands
as fast as possible. As the Commissioner of the General Land Office puts
it, seemingly without consciousness of the sarcasm involved, "It has ever
been the anx¡ous desire of the Government to transmute its title to
the soil into private ownership by the most speedy processes that could be
In one sense our land dealings have been liberal
enough. The Government has made nothing to speak of from its lands, for
the receipts from sales have been not much more than sufficient to pay
the cost of acquisition or extinguishment of Indian title, and the expenses
of surveying and of the land office. But our liberality has been that of
a prince who gives away a dukedom to gratify a whim, or lets at a nominal
rent to a favoured Farmer-General the collection of taxes for a province.
We have been liberal, very liberal, to everybody but those who have a right
to our liberality, and to every importunate beggar to whom we would have
refused money we have given land—that is, we have given to him or to them
the privilege of taxing the people who alone would put this land to any use.
So far as the Indians, on the one hand, and
the English proprietaries of Crown grants, on the other, were concerned,
the founders of the American Republic were clearly of the opinion that
the land belongs to him who will use it; but farther than this they did
not seem to inquire. In the early days of the Government the sale of wild
lands was looked upon as a source from which abundant revenue might be drawn.
Sales were at first made in tracts of not less than a quarter township,
or nine square miles, to the highest bidder, at a minimum of $2 per acre,
on long credits. It was not until 1820 that the minimum price was reduced
to $1.25 cash, and the Government condescended to retail in tracts of 160
acres. And it was not until 1841, sixty-five years after the Declaration
of Independence, that the right of preemption was given to settlers upon
surveyed land. In 1862 this right was extended to unsurveyed land. And in
the same year, 1862, the right of every citizen to land, upon the sole condition
of cultivating it, was first recognized by the passage of the Homestead law,
which gives to the settler, after five years' occupancy and the payment of
$22 in fees, 160 acres of minimum ($1.25) or 80 acres of double-minimum ($2.50)
Still further in the right direction did the
zeal of Congress for the newly enfranchised slaves carry it in 1866, when
all the public lands in the five Southern land States—Alabama, Mississippi,
Louisiana, Florida, and Arkansas—were reserved for homestead entry.
But this growing liberality to the settler
has been accompanied by a still more rapidly growing liberality to speculators
and corporations, and since the preemption and homestead laws were passed,
land monopolization has gone on at a faster rate than ever. Without dwelling
on the special means, such as the exercise of the treaty-making power, by
which large tracts of land in some of the Western States have been given
to railroad corporations and individuals for a few cents per acre, let us
look at the general methods by which the monopolization of Government land
has been and is being accomplished.
PUBLIC SALE AND PRIVATE ENTRY.
THE first method adopted for the disposal
of public lands was their sale to the highest bidder. This theory has
never been abandoned. After lands have been surveyed, they may, at any
time, be ordered to be offered at public sale. This public sale is only
a matter of form, purchasers at more than the minimum price seldom or never
But the offering makes an important difference
in the disposition of the lands. Before being offered at public sale they
are open only to preemption and homestead entry—that is, to actual settlers,
in tracts not exceeding 160 acres.
After being offered, they are open to private
entry—that is, they may be purchased by anyone in any amount, at the minimum
price, $1.25 per acre.
Whether by the misrepresentations of speculators
or the inadvertence of the authorities, public sales, as a general thing,
have been ordered before the line of settlement had fairly reached the
land, and thus the speculator has been able to keep in advance, picking
out the choice lands in quantities to retail at a largely advanced price
or to hold back from improvement for years.
By means of cabins built on wheels or at the
intersection of quarter section lines, and false affidavits, a good deal
of land grabbing has also been done under the preemption and homestead laws.
More, however, in the Mississippi Valley States than elsewhere.
DONATIONS OF PUBLIC LANDS.
THUS land monopolization has gone on in the
ordinary course of our land dealings. But the extraordinary means, which
have done most to hasten it, have been the donations of land in immense
It is a trite saying that men are always disposed
to be liberal with that, which is not their own—a saying which has had
exemplifications enough in the history of all our legislative bodies. But
there is a check to the appropriation of money, in the taxation involved,
which, if not felt by those who vote the money away, is felt by their constituents.
Not so with appropriations of land. No extra taxation is caused, and the
people at whose expense the appropriations are made—the settlers upon the
land have not yet appeared. And so Congress has always been extremely liberal
in giving away the public lands on all pretexts, and its liberality has
generally been sanctioned, or at least never seriously questioned by public
opinion. The donations of land by Congress have been to individuals, to
States, and to corporations.
THE BOUNTY LAND GRANTS.
THE grants to individuals consist chiefly
of bounties to soldiers and sailors of the War of 1812 and the Mexican
War, and amount to about 73,000,000 acres, for which transferable warrants
were issued. Nearly all of this scrip passed into the hands of speculators,
not one warrant in five hundred having been located by or for the original
holder. It has been estimated that, on an average, the warrants did not
yield the donees twenty-five cents per acre. But taking fifty cents as
a basis, we are able to form an idea of the disproportion between the cost
of the gift to the nation and the benefit to the soldiers. Leaving out of
the calculation the few that have taken the land given them, we find that
the Government gave up a revenue of $91,067,500, which it would have received
from the sale of the land at $1.25 per acre, in order to give the soldiers
$36,427,000, or, in other words, every dollar the soldiers got cost the
nation $2.50! Nor does this tell the whole story. Though some of this scrip
was located by settlers who purchased it from brokers at an advance on the
price paid soldiers, most of it has been located by speculators who, with
the same capital, have been enabled to monopolize much more land than they
could otherwise have monopolized, and to monopolize land even before it was
offered at public sale. If we estimate the advance which settlers have had
to pay in consequence of this speculation at $2 per acre for the amount of
transferred scrip, we have a tax upon settlers of $145,708,000, which, added
to the loss of the Government, gives a total of $236,775,500, given by the
Government and exacted from settlers in order to give the soldiers $36,427,000!
And yet the story is not told. To get at the true cost of this comparatively
insignificant gift, we should also have to estimate the loss caused by dispersion—by
the widening of the distance between producer and consumer—which the land
speculation, resulting from the issue of bounty warrants, has caused. But
here figures fail us.
GRANTS TO STATES.
THE donations of land by the general Government
to individual States have been large. Besides special donations to particular
States, the general donations are 500,000 acres for internal improvements,
ten sections for public buildings, seventy-two sections for seminaries,
two sections in each township (or 1-18th) for common schools, and all the
swamp and overflowed lands, for purposes of reclamation. These grants have
been made to the States, which contain public land, of land within their
borders. In addition, all the States have been given 30,000 acres for each
of their Senators and Representatives, for the establishment of agricultural
If land is to be sold, it is certainly more
just that the proceeds should go to the States in which it is located
than to the general Government, and the purposes for these grants have
been made are of the best. Yet judging from the standpoint of a right land
policy, which would give the settler his land at the mere cost of surveying
and book-keeping, even in theory, they are bad. For why should the cost
of public buildings, or even of public education, be saddled upon the
men who are just making themselves farms, who, as a class, have the least
capital and to whom their capital is of the most importance?
But whether right or wrong in theory, in practice,
like the military bounties, these grants have proved of but little benefit
to the States in comparison with their cost to the nation and to settlers.
As a general rule they have been squandered by the States, and their principal
effect has been to aid in the monopolization of land. How true this is
will be seen more clearly when we come to look at the land policy of the
State of California.
THE AGRICULTURAL COLLEGE GRANT.
THE Agricultural College grant was made
in 1862, and has since been extended as the Representatives of other States
have been admitted. It aggregates 9,510,000 acres, and if extended to the
Territories as they come in, will take at least 11,000,000 acres. This grant
differs from the other State grants in this: that it is given to all States,
whether they contain public land or not; those in which there is no public
land being permitted to take their land in other States which do contain
it. This feature makes this grant, in theory at least, the very worst of
the grants, for it throws upon the settlers in new and poor States the burden
of supporting colleges not merely for their own State but for other and far
For instance, the State of New York, the most
populous and wealthy member of the Union, receives 990,000 acres, which
must all be located in the poor far-Western States. Thus to this old and
rich State is given the power of taxing the settlers upon nearly a million
acres in faroff and poor States for the maintenance of a college which
she is far more able to support than they are. If New York has located
this land well, and retains it (as I believe is the intention), in a very
few years she will be able to rent it for one fourth or even one third of
the crop. That is, for the support of one of her own institutions, New York
will be privileged to tax 50,000 people, fifteen hundred or two thousand
miles away, to the amount of one fourth or one third of their gross earnings.
And as time passes, and population becomes denser, and land more valuable,
the number of people thus taxed will increase and the tax become larger.
The Cornell University, to which the New York grant has been made over, is
a noble and beneficent institution; but will anyone say that it is just
to throw the burden of its support upon the labouring classes of far-off
The same thing is true of all the old and
rich States, which are thus given the right to tax the producers of new
and poorer States. That most of these States have sold this right to speculators
at rates ranging from 37½ to 80 cents per acre, only makes the matter
worse. But perhaps this injustice is even more evident in the case of those
Southern States, which do contain public land. The public land of Texas (of
which there are some 80,000,000 acres left) belongs to the State; that in
the other Southern land States was reserved for homestead entry by the Act
of 1866. These States get the same amount of land under this grant as the
others; but none of it is taken from their own lands, and their college scrip
is now being plastered over the public lands in California and the Northwest,
much of it being located here.
California gets 150,000 acres under the Act.
Yet, besides this, there have been located here up to June of last year
more than 750,000 acres of the land scrip of other States, and large amounts
have since been located or are an average of, probably, 50 cents per acre.
What the giving of this paultry donation has cost us we know too well.
A great deal of the land thus located at a cost of to the speculator of
50 cents per acre has been sold to settlers at prices ranging from 5 to 10
per acre, much of it held for higher prices than can now be obtained; and
a great deal of it being rented for one fourth of the gross produce, the
renter supplying all the labour and furnishing all the seed; while the
land monopolization, of which this agricultural scrip has been one of the
causes, has turned back immigration from California, has made business of
all kinds dull, and kept idle thousands of mechanics and producers who would
gladly have been adding to the general wealth.
Badly as California has suffered, other States
have suffered worse. Wisconsin is entitled to 210,000 acres; yet, up to
June, 1870, 1,111,385 acres had been located in that State with agricultural
scrip. Nebraska gets only 90,000 acres, yet the agricultural scrip locations
in Nebraska up to the same time were nearly a million acres.
SOME four millions of acres have been donated
for the construction of various wagon roads, and some four millions and
a half for the construction of canals; but by far the largest grants have
been to railroads—the amount given to these companies within the last ten
years aggregating nearly one half as much as all the public lands disposed
of in other ways since the formation of the Government. This policy was
not commenced until 1850, when six sections per mile, or in all 2,595,053
acres, were granted for the construction of the Illinois Central road. This
donation was made to the State, and by it assigned to the company on condition
of the payment to the State of seven per cent of its gross receipts in lieu
of taxation. This grant, which now seems so insignificant, was then regarded
as princely, and so it was, as it has more than paid for the building
and equipment of the road. The example being set, other grants of course
followed. In 1862, a long leap ahead in the rapidity of the disposal of
the public lands was taken in the passage of the first Pacific Railroad
bill, giving directly, without the intervention of States, to the Union,
Central and Kansas companies ten sections of land per mile (at that time
the largest amount ever granted), and $16,000 per mile in bonds. In 1864
this grant was doubled, making it twenty sections or 12,800 acres per mile,
and at the same time the bonded subsidy was trebled for the mountain districts
and doubled for the interior basin while the Government first mortgage for
the payment of the bonds was changed into a second mortgage.
But the disposition
to give away lands kept on increasing, and the Northern and Southern Pacific
getting no bonds, the land grant to them was again doubled—making it forty
sections or 25,600 acres per mile, or, to speak exactly, twenty sections
in the States and forty sections in the Territories. To these three Pacific
roads alone have been given 150,000,000 acres in round numbers more than
is contained in all Germany, Holland and Belgium, with their population
of over fifty millions—more land than that of any single European state
except Russia. The largest single grant—and it is a grant unparalleled in
the history of the world—is that to the Northern Pacific, which aggregates
58,000,000 acres. And besides this these roads get 400 feet right of way
(which in the case of the Northern Pacific amounts to 100,000 acres), what
land they want for depots, stations, etc., and the privilege of taking material
from Government land, which means that they may cut all the timber they
wish off Government sections reserving that on their own. With these later
grants has also been inaugurated the plan of setting aside a tract on each
side of the grant in which the companies may make up any deficiency within
the original limits by reason of settlement. Thus the grant to the Southern
Pacific withdraws from settlement a belt of land sixty miles wide in California
and one hundred miles wide in the Territories, and that to the Northern
Pacific withdraws a belt one hundred and twenty miles wide from the western
boundary of Minnesota to Puget Sound and the Columbia River.
Since the day when
Esau sold his birthright for a mess of pottage we may search history in
vain for any parallel to such concessions. Munificence, we call it! Why,
our common use of words leaves no term in the English tongue strong enough
to express such reckless prodigality. Just think of it! 25,600 acres of
land for the building of one mile of railroad—land enough to make 256 good-sized
American farms; land enough to make 4,400 such farms as in Belgium support
a family each in independence and comfort. And this given to a corporation,
not for building a railroad for the Government or for the people, but
for building a railroad for themselves; a railroad which they will own
as absolutely as they will own the land—a railroad for the use of which
both Government and people must pay as much as though they had given nothing
for its construction.
THE VALUE OF THESE GRANTS.
IF we look but a few years ahead, to the
time when we shall begin to feel the pressure of a population of one hundred
millions, the value of these enormous grants is simply incalculable. But
their immediate value is greatly underestimated. Land was given to the
first Pacific roads as though it had not and never would have any value.
Money enough to build the roads and leave princely fortunes besides was
placed in the hands of the companies, and the land was thrown in as a liberal
grocer might throw an extra lump of sugar into the already falling scale.
Yet it is already apparent that by far the most valuable part of these franchises
are these land grants. The timber, which the Central Pacific gets in the
Sierras will of itself yield more than the cost of the whole road. In addition,
it has large amounts of good agricultural lands in California and along the
Nevada river bottoms, and millions of acres of the best grazing lands in
the sagebrush plains of Nevada and Utah, while there are thousands of acres
of its lands which will have enormous value from the coal, salt, iron, lead,
copper and other minerals they contain. The Union Pacific lands in the Platte
Valley have, so far as sold, yielded it an average of $5 per acre; and though
it gets no timber to speak of, it has millions of acres which will soon be
valuable for grazing, and for a long distance its route passes through the
greatest coal and iron deposits of the continent, where much of its 12,600
acres per mile will in time be valued at thousands of dollars per acre.
Twenty years ago,
when the Illinois Central receive its grant, its lands were worth no more
than those now given the Northern Pacific. Yet the lands sold by the Illinois
Central have averaged over $12 per acre, and those yet remaining on hand
are held at a still higher price. Counting at the company's price what
is held, the grant has yielded over $30,000,000—much more than the cost
of the road. If six sections per mile will do this in twenty years, what
should forty sections per mile do?
The Directors of
the Northern Pacific have themselves estimated their grant to be worth
$10 per acre on the completion of the road. I think they rather under-
than over-estimated it, and for an obvious reason. A true statement of the
real value of the grant would tend to discredit the whole affair in the eyes
of the cautious foreign capitalists, from whom the company seeks to borrow
money, for they would not believe that any Government could be extravagant
enough to make such a donation. But it must be remembered that the line of
the Northern Pacific passes for nearly its whole length through as fine an
agricultural country as that of Illinois; that its grant consists, in large
part, of immensely valuable timber and mineral land, and that it will build
up town after town, one of them at least a great commercial city, on its
reasons before stated, the increase in the value of land during the next
twenty years must be much greater than it has been in the last twenty years.
Taking these things into consideration, is it too much to say that in twenty
years from now the lands of the company will have sold for or will be worth
an average of at least $20 per acre? At this rate the grant amounts to
over half a million dollars per mile, or in the aggregate to the enormous
sum of $1,160,000,000—a sum more than half the national debt. This donated
absolutely to one corporation. And for what? For building a road which
cannot cost more than eighty millions, and for building it for themselves!
No keener satire
upon our land-grant policy could be written than that which is to be found
in the published advertisement of this Northern Pacific Company. The Directors
show that if they get an average of but $2 per acre for their land, they
can pay the whole cost of building and equipping the road and have a surplus
of some $20,000,000 left. That is to say, the Government might have built
the road by merely raising the average price of the lands $1 per acre,
and have made a profit by the operation, while it would then own the road,
and could give or lease it to the company which would agree to charge the
lowest rates. As it is, the Government has raised the price to settlers
on one half the land $1.25 per acre; the other half it has given to the
company to charge settlers just what it pleases; and then on this railroad
which it has made the settlers pay for over and over again both Government
and settlers must pay for transportation just as though the road had been
built by private means.
THE ARGUMENT FOR RAILROAD GRANTS.
SO plausible and so ably urged are the arguments
for these grants, such general acceptance have they gained, and so seldom
are they challenged (for the opposition which has been made has been rather
against the extravagance than the theory of the grants) that it is worth
while to consider them with some care.
The plea for railroad
land grants is about this: By giving land to secure the building of railroads,
we develop the country without expense, or at least at the expense of
those who largely profit by the operation. The land, which we give is
useless as it is; the railroad makes it useful and valuable. The Government
giving really nothing of present value, does not even deprive itself of
that which it might receive in the future, for it is reimbursed for the
selling price of the land it gives by doubling the price of the land it
retains. The Government in fact acts like a sagacious individual, who having
an unsaleable estate, gives half of it away to secure improvements which
will enable him to sell the other half for as much as he at first asked
for the whole. The settler is also the gainer, for land at $2.50 per acre
with a railroad is worth more to him than land at $1.25 per acre without
a railroad, and vast stretches of territory are opened to him to which
he could not otherwise go for lack of means to transport his produce to
market; while the country at large is greatly the gainer by the enormous
wealth which railroads always create.
"Here are thousands
of square miles of fertile land," cries an eloquent Senator, "the haunt
of the bear, the buffalo and the wandering savage, but of no use whatever
to civilised man, for there is no railroad to furnish cheap and quick communication
with the rest of the world. Give away a few millions of these acres for
the building of a railroad and all this land may be used. People will go
to settle, farms will be tilled and towns will arise, and these square
miles, now worth nothing, will have a market and a taxable value, while
their productions will stream across the continent, making your existing
cities still greater and their people still richer; giving freight to your
ships and work to your mills."
All this sounds very eloquent to the land-grant
man who stands in the lobby waiting for the little bill to go through
which is to make him a millionaire, and really convinces him that he is
a benefactor of humanity, the Joshua of the hardy settler and the Moses
of the downtrodden immigrant. And backed up, as it is, by columns of figures
showing the saving in railroad over wagon transportation, the rapidity
of settlement where land grants have been already made, and the increase
in the value of real estate, it sounds very plausible to those who have
not anything like the reason to be as easily convinced as has the land-grant
man. But will it bear the test of examination? Let us see:
In the first place it must be observed that
the consideration for which we make these grants is purely one of time
-to get railroads built before they would otherwise be built. No one will
seriously pretend that without land grants railroads would never be built;
all that can be claimed is that without grants they would not be built
so soon-that is, until the prospective business would warrant the outlay.
This is what we get, or rather expect to get, for we do not always get
it. What do we give? We give land. That is, we give the company, in addition
to the power of charging (practically what it pleases) for the carrying
it does, the unlimited power of charging the people who are to settle upon
one half the land for the privilege of settling there. If the Government
loses nothing, it is because the settlers on one half of the land must pay
double price to reimburse it, while the settlers on the other half must
pay just what the company chooses to ask them.
Now, in the course of the settlement of this
land there comes a time when there are enough settlers, together with the
prospective increase of settlers, to warrant the building of a railroad
without a land grant. Admitting that the settlers who come upon the land
before that time are gainers by the land grant in getting a railroad before
they otherwise would, it is evident that the settlers after that: time
are losers by the amount of the additional price which: they must pay for
their land, for they would have had a 'railroad anyhow.
And this point where the gain of settlers
ceases, and the loss of settlers commences, is very much nearer the beginning
of settlement-that is to say, there are fewer gainers and more losers,
than might at first glance be supposed. For if there were no land grants
at all, the land would be open to settlers as homesteads, or at $1.25 per
acre, and therefore the number of actual settlers which would justify the
construction of a non-land-grant railroad would be very much smaller than
that which would suffice to furnish a land-grant railroad with a paying
business, as the prospective increase during and upon the completion of
the road would be very much greater.
So therefore, when, by giving a land grant,
we get a railroad to precede settlement, if the first settlers gain at
all, the others lose. The gain of the first is lessened by their having
to pay double price for their lands; the loss of the others is mitigated
by no gain. So that, as far as settlers are concerned, we are sacrificing
the future for the present; we are taxing the many for the very questionable
benefit of the few. And even in the case of the gainers, their first advantage,
in having a railroad before its natural time, is offset by the subsequent
retardation of settlement in their neighbourhood, which the land grant causes.
For if the first effect of the land grant
is to hasten settlement by getting a railroad built, its second effect
is to retard it by enhancing the price of lands. Illinois, where the first
railroad land grant was made, may in a year or two after have had more people,
but for years back her population has certainly been less because of it.
For nearly half a million acres—one fifth of this grant—remained unoccupied
in 1870, the company holding it at an average price of $13 per acre. If this
land could have been had for $1.25 per acre, it would have been occupied years
ago. This is the case wherever land grants have been made, and long before
the Territories, in which we are now giving away 25,000 acres per mile for
the building of railroads, are one tenth settled, we will be asked to give
away like amounts of other unappropriated territory (if there is any by that
time left) in order to furnish "cheap homes to the settlers!"
Considering all the people who are to come
upon our now unoccupied lands, weighing the near future with the present,
is it not evident that the policy of land grants is a most ruinous one even
in theory-even when we get by it that which we bargain to get? Let us see
how it affects the community at large in the present.
Where a land grant is necessary to induce
the building of a road, it is because the enterprise itself will not pay—that
is to say, at least, that it will not yield as large a return for the
investment as the same amount of capital would yield if invested somewhere
else. The land grant is a subsidy, which we give to the investors to make
up this loss.
Is it not too plain for argument, that where
capital is invested in a less remunerative enterprise than it otherwise
would be, there is a loss to the whole community? Whether that loss is made
up to the individuals by a subsidy or not, only affects the distribution
of the loss among individuals—the loss 'to the community, which includes
all its individuals, is the same.
But it will be said: Though this may be true
so far as the direct returns of the railroad are concerned, there are other
advantages from railroad building besides the receipts from fares and freights.
The owners of the land through which the road passes, the producer and
the consumer of the freight which it carries, and the passenger who rides
upon it, are all benefited to an amount far exceeding the sums paid as
fares and freight. When we give a land grant, we merely give the railroad
company a share in these diffused profits: which will make up to it the
loss, which would accrue were it confined to its legitimate share. Thus:
Here is a railroad, the business of which would not pay for building it
for five years yet. The loss to the unsubsidized company, which would build
it now and run it for five years, would be $10,000,000. But the gain to
landowners and others would be $100,000,000. Now, if by a land grant or
otherwise, we secure to the railroad company a share of this collateral
gain, amounting to $20,000,000, the railroad company will make a profit
of $10,000,000, instead of a loss of $10,000,000, by building the road,
and others would make a profit of $80,000,000.
But it must be remembered that every productive
enterprise, besides its return to those who undertake it, yields collateral
advantages to others. It is the law of the universe—each for all, and
all for each. If a man only plants a fruit tree, his gain is that he gathers
its fruit in its time and its season. But in addition to his gain, there
is a gain to the whole community in the increased supply of fruit, and in
the beneficial effect of the tree upon the climate. If he builds a factory,
besides his own profit he furnishes others with employment and with profit;
he adds to the value of surrounding property. And if he builds a railroad,
whether it be here or there, there are diffused benefits, besides the direct
benefit to himself from its receipts.
Now, as a general rule, is it not safe to
assume that the direct profits of any enterprise are the test of its diffused
profits? For instance: It will pay to put up an ice-making machine rather
in New Orleans than in Bangor. Why? Because more people in New Orleans need
ice, and they need it more than those in Bangor. The individual profit will
be greater, because the general profit will be greater. It will pay capitalists
better to build a railroad between San Francisco and Santa Cruz than it
will to build a like railroad in Washington Territory. Why? Because there
are more people who will ride, and more freight to be carried, on the one
than on the other. And as the diffused benefit of a railroad can only inure
from the carrying of passengers and freight, is it not evident that the diffused
benefit is greater in the one case than in the other, just in proportion
as the direct benefit is greater?
In the second place, in any particular ease
in which we have to offer a subsidy to get a railroad built, the question
is not, shall we have this railroad or nothing?—but, shall we have this
road in preference to something else?—for the investment of capital in one
enterprise prevents its investment in another. No legislative act, no issue
or bonds, no grant of lands, can create capital. Capital, so to speak, is
stored-up labour, and only labour can create it. The available capital of
the United States at any given time is but a given quantity. It may be invested
here or it may be invested there, but it is only here or there that it can
be invested. Nor is there any illimitable supply abroad to borrow from. The
amount of foreign capital seeking investment in the United States is about
so much each year; and if by increasing our offers we get any more, we must
pay more, not merely for the increased amount, which we get, but for all
which we get.
To recur, now, to our former example: Here
is a railroad through an unsettled country, which to build now would, relying
upon its direct receipts, entail a loss of $10,000,000, the diffused benefits
of which may be estimated at $100,000,000. Here is another railroad which
it would take the same capital to build, which, in the same time, would
yield a direct profit of $5,000,000, and the diffused benefits of which
it is fair to presume might be expressed by $300,000,000. Now if we offer
to the builders of the first road a land grant which will enable them to
obtain one fifth of the diffused benefits of the road, we could induce them
to build that road rather than the other for they would make twice as much
by doing so. But what would be the net result to the community? Clearly a
loss of $215,000,000. That is to say: By offering a land grant we could
induce capitalists to build a road in Washington Territory, rather than
between San Francisco and Santa Cruz. But if we did do so, the people between
San Francisco and Santa Cruz would lose far more than the capitalists and
the Washington Territory settlers would gain; the people of the Pacific
Coast, as a whole, and the United States, as a whole, would be poorer than
if we had left capital free to seek the investments which would of themselves
return to it the largest profits.
The comparison between an individual and the
nation is fallacious. The one is a part, the other is the whole. The individual
lives but a few years, the lifetime of the nation is counted by centuries.
It may profit an individual to induce people to settle or capital to be
invested in certain places; the nation can only profit by having its population
and its capital so located and invested that the largest returns will be
realized. It may profit an individual to sacrifice the near future to the
present, but it cannot profit a nation.
As concerns the statistics by which the benefits
of land-grant railroads are attempted to be shown, it must be remembered,
first, that the population of the United States is growing at the rate
of a million per year, and next, that increase in the value of land is
not increase in wealth.
That whatever population railroads have brought
to new States and Territories is dispersion, not increase, is proven by
the fact that the population of the United States is not increasing faster
than it did before railroad building commenced, while the slightest consideration
of economic laws shows that whatever gain has resulted from their building
is at the expense of a greater gain which would have resulted from the
investment of the same capital where it was more needed-in fact, that there
is no gain, but a loss. We have been supposing that land grants secure
the consideration for which they are given-the building of roads before
they would otherwise be built; but this is far from being always the case.
With the exception, perhaps, of the little Stockton and Copperopolis road,
the California grants have not hastened the building of railroads, but
have actually retarded it, by retarding settlement. The fact is, that in
nearly all cases these land grants are made to men who do not propose, and
who have not the means, to build the road. They keep them (procuring extensions
of time, when necessary until they can sell out to others who wish
to build, and who, on their part, generally delay until they can see a
profit in the regular business.
To sum up: When we give a land grant for the
building of a railroad, we either get a railroad built before it would be
built by private enterprise, or we do not.
If we do not, our land is given for nothing;
if we do, capital is diverted from more to less productive investments,
and we are the poorer for the operation.
In either case the land grant tends to disperse
population; in either case it causes the monopolization of land; in either
case it makes the many poorer, and a few the richer.
I have devoted this much space to answering
directly the argument for railroad land grants, because they are constantly
urged, and are seldom squarely met, and because so long as we admit that
we may profit by thus granting away land in "reasonable amounts," we shall
certainly find our lands going in "unreasonable amounts." But surely it
requires no argument to show that this thing of giving away from twelve
to twenty-five thousand acres per mile of road in order to get people to
build a railroad for themselves is a wicked extravagance for which no satisfactory
excuse can be made. This land, now so worthless that we give it away by the
million acres without a thought, is only worthless because the people who
are to cultivate it have not yet arrived. They are coming fast -we have seen
how fast. While there is plenty of uncultivated land in the older States,
we are giving away the land in the Territories under the plea of hastening
settlement, and when the time comes that these lands are really needed for
cultivation, they will all be monopolized, and the settler, go where he will,
must pay largely for the privilege of cultivating soil which since the dawn
of creation has been waiting his coming. We need not trouble ourselves about
railroads; settlement will go on without them-as it went on in Ohio and Indiana,
as it has gone on since our Aryan forefathers left the Asiatic cradle of
the race on their long westward journey. Without any giving away of the land,
railroads, with every other appliance of civilization, will come in their
own good time. Of all people, the American people need no paternal Government
to direct their enterprise. All they ask is fair play, as between man and
man; all the best Government can do for them is to preserve order and administer
There may be cases in which political or other
noneconomic reasons may make the giving of a subsidy for the building of
a road advisable. In such cases, a money subsidy is the best, a land subsidy
the worst. But if the policy of selling our lands is continued, and it is
desirable to make the payment of the subsidy contingent upon the sale of
the land, then the proceeds of the land, not the land itself, should be
There is one argument for railroad land grants,
which I have neglected to notice. Senator Stewart pleads that these grants
have kept the land from passing into the hands of speculators, who would
have taken more than the railroad companies, and have treated the settlers
less liberally than the companies. Perhaps he is right; there is certainly
some truth in his plea. But if he is right, what does that prove? Not the
goodness of railroad grants; but the badness of the laws, which allow speculation
in the public lands.