Railroad Land Grants

Overview

Railroad land grants were the US federal government's practice, chiefly from 1850 to 1871, of ceding public land directly to railroad corporations — typically alternating sections in a checkerboard pattern along the surveyed right-of-way — as a subsidy for construction, on the theory that the railroad itself would raise the value of the remaining, retained federal sections.[1] Estimates of the total federal acreage granted to roughly 80 railroad companies range from about 129 million to over 175 million acres depending on methodology and cutoff date, supplemented by a further tens of millions of acres granted directly by state governments.[1] The single largest federal grant went to the Northern Pacific Railroad, chartered by the Act of July 2, 1864 (ch. 217, 13 Stat. 365), which granted alternating sections in a checkerboard twenty sections per mile of line in the territories and ten per mile in the states — the widest checkerboard of any grant.[2] The "40–47 million acre" spread that appears across sources reflects different points in the accounting: the primary limits of the grant, under the 1864 charter and an 1870 joint resolution, came to 43,998,861 acres by the Interior Department's own reckoning, but the grant was found (as of 31 December 1921) to be deficient by about 3.9 million acres, leaving the railroad with close to 40 million acres actually earned — the figure most modern histories cite — while older gross tallies reach 46–47 million. The line ran from Lake Superior to Puget Sound.[2]

The Northern Pacific grant is also the clearest case of railroad land grants feeding directly into a financial crisis. Financier Jay Cooke, whose firm underwrote the railroad's construction bonds against the collateral of its land grant, could not sell enough bonds to keep pace with construction costs; when Jay Cooke & Co. failed on 18 September 1873, it triggered the Panic of 1873, one of the worst depressions in US history to that point.[2][3] Henry George attacked railroad land grants directly in his early pamphlet Our Land and Land Policy (1871), arguing that vesting vast tracts of the public domain in corporations created a new landed monopoly analogous to the aristocratic estates he saw as the root of Old World poverty — an argument he carried forward into Progress and Poverty.[3]

See Also

• Land Monopoly — the general concept George applied to grants like these
• Land Speculation — the behavior the withheld grant lands were frequently used for
• Boom-Bust Cycle — the pattern the Panic of 1873 exemplifies
• The Secret Life of Real Estate and Banking — discovery source situating the Northern Pacific grant within the 18-year land cycle
• Narrative: The Great Land Robbery — the broader justice narrative about how existing land titles were acquired

Sources

1. "Railroad land grants in the United States," Wikipedia, drawing on Library of Congress railroad-map essays — used for the general federal grant program, its 1850–1871 timeframe, and the range of total-acreage estimates (129–175+ million federal acres to roughly 80 companies, plus state grants). Wikipedia · Library of Congress
2. Northern Pacific Railroad 1864 charter, acreage accounting, and Jay Cooke & Co.'s bankruptcy. Statute: Act of July 2, 1864, ch. 217, 13 Stat. 365 (the Statutes at Large are hosted by the Library of Congress's A Century of Lawmaking for a New Nation, vol. 13); the citation is confirmed by the U.S. Supreme Court, which describes "the grant of public land to the Northern Pacific Railroad Company in the Act of July 2, 1864, 13 Stat. c. 217" in St. Paul & Pacific R. Co. v. Northern Pacific R. Co., 139 U.S. 1 (1891). Acreage: Ted Schwinden, "Northern Pacific Land Grants in Congress" (M.A. thesis, University of Montana, 1950), ScholarWorks, citing Interior Department / General Land Office figures, gives "the total area of the primary limits of the grant under the acts of 1864 and 1870 was 43,998,861.04 acres" and records that "on December 31, 1921, the grant was found to be deficient by 3,933,712.51 acres" — i.e. roughly 40 million acres actually earned, consistent with the "nearly 40 million acres" the railroad is standardly said to have received (Wikipedia: Northern Pacific Railway). This resolves the earlier 40–47 million-acre spread: ~44 M gross primary limits, less a ~3.9 M deficiency, ≈ 40 M net; the 46–47 M figures are older gross estimates. The 18 September 1873 collapse of Jay Cooke & Co. triggered the Panic of 1873.
3. Phillip J. Anderson, The Secret Life of Real Estate and Banking (Shepheard-Walwyn, 2008), Ch. 8 — the discovery source for this page; situates the Northern Pacific land grant, Jay Cooke's collapse, and the 1869–73 land boom within the recurring 18-year land cycle, and notes Henry George's Our Land and Land Policy (1871) as an early attack on railroad land grants. See the wiki book page.