Meanwhile, settlers who could not afford to put up $640 were nevertheless moving west of the mountains, staking claims, and claiming squatters’ rights to the land. In 1787, the federal government sent troops to burn homes and evict squatters along the Ohio River. But the squatters returned as soon as the troops left.38 From 1781 through 1788, Massachusetts aggressively tried to remove squatters from Maine.39 Continuing troubles with squatters contributed to the decision to spin off Maine as a separate state in 1820.
Another obstacle to pioneers’ taking title to the land was Indian ownership of some lands. Although the federal government recognized Indian title to much of the trans-Appalachian territory, it did not recognize the right of Indian tribes to sell land to white settlers. This policy and the government’s acquisition was based on an 1823 Supreme Court decision, Johnson v. M’Intosh, which in turn was based on a long-standing European tradition that only a sovereign nation has the right to extinguish Indians’ interests in their land. The British government, for example, proclaimed in 1763 that “no private person do presume to make any purchase from the said Indians of any lands reserved to the said Indians.”40
Although the federal government did eventually negotiate the purchase of most trans-Appalachian lands from Indian tribes, the government’s acquisition further delayed the ability of settlers to take title to land. In 1807, Jefferson ordered troops to expel squatters from lands recently purchased from the Chickasaw and Cherokee Indians as well as from lands still owned by Indians.41
Giving Away the Federal Domain
Eventually, Congress gave up on the idea of selling land to repay the Revolutionary War debt and began giving land to various groups. Between Ohio in 1803 and Arizona in 1912, Congress eventually gave new states 218 million acres of federal land (plus another 105 million acres to Alaska in 1959) on statehood with the intention that the states would sell or manage those lands to pay for schools and other public programs.42 Starting in 1823, Congress eventually granted 140 million acres (some of which were never claimed, were returned, or were revested by Congress) to private companies to promote the construction of canals, wagon roads, railroads, and river improvements.43
Congress intended that the states, railroads, and other entities would sell those lands to settlers, but that didn’t always happen. Alaska still owns about 90 million acres of the land it received on statehood, and 22 of the 29 other states that received land grants still own about 45 million acres of their grants.44 Millions of acres of railroad land grants were either retained by the railroads or sold in large blocks to timber companies.
In 1841, Congress allowed squatters to purchase up to 160 acres of land they had lived on for at least 14 months for not less than $1.25 per acre, and $2.50 an acre on alternate sections of railroad land grants.45 That price was still prohibitive for subsistence farmers, and land sales—which had peaked in 1836—were 70 percent lower in the decade following the act than the decade before.
In 1850, Congress passed the Donation Land Claim Act, which allowed settlers in the Oregon Territory to claim up to 320 acres each (640 for married couples) at no charge provided that they cultivated the land for four years. This act led 7,317 people to claim about
2.8 million acres, mostly in Oregon’s Willamette Valley. The law was mainly for the benefit of settlers who started coming over the Oregon Trail in 1841 in an overt effort to claim the Oregon Territory for the United States, which had jointly held the land with Great Britain since 1818.46 But it was a generous grant, as Willamette Valley farmlands were much more productive than much of the land that was later homesteaded in parcels of just 160 acres.
The debate over whether to sell federal land to help pay the public debt or give it away to settlers to promote economic expansion was finally settled in 1862, when Congress passed the Homestead Act, granting any actual settler 160 acres (320 for married couples) at a nominal fee of $18 provided they lived on the land for five years. Eventually, about 270 million acres of land were distributed to 1.6 million people under this law.47 Distribution was not immediate, however: homestead claims did not peak until 1910, and actual title transfers peaked in 1913.
Between 1862 and 1900, only 80 million acres of land were granted under the Homestead Act. At 160 acres per claim, they were enough for 500,000 people. But since many claims were filed by married couples, far fewer families were probably represented. Rural populations grew by 20 million people during that period, which (at the then-average family size of 5.5 people) represent about 3.6 million families. The Homestead Act provided land for just 7 to 14 percent of those families.
During the 19th century, the United States acquired vast amounts of land, including the Louisiana Purchase, more than half of Mexico, the Oregon Territory, and Alaska. Yet most of that land remained unavailable or unaffordable to many settlers until the 1862 Homestead Act. Even the Homestead Act was insufficient since the 320 acres of land that could be granted to a married couple was too little to make a living in the arid West, where most of that land was located.
Through the combined effects of the Homestead Act, the Donation Land Claims Act, and other laws, Congress eventually managed to get several hundred million acres of once-federal lands into the hands of settlers with secure titles. Economist de Soto argues that “the result was an integrated property market that fueled the United States’ explosive economic growth thereafter.”48 That’s probably a stretch. Although those laws gave nearly two out of three farmers secure title to their land by 1890, urban home- and landownership rates remained low through the end of the 19th century. Yet most of the nation’s economic growth after 1840 took place in cities, not in agricultural areas. What can be stated with greater certainty is that secure title to farms contributed to agricultural productivity in the late 19th century, while increased urban homeownership contributed to small-business growth in the latter half of the 20th century.
In sum, it appears likely that homeownership and farm-ownership rates were something less than 40 percent in 1800, or no more than the rate recorded by the 1890 census. From there, historians agree that rates declined for at least the first half of the 19th century.49 That decline occurred both because of the difficulty farmers had in obtaining title to lands acquired by the federal government and because the nation’s growing cities increasingly housed low-paid working-class employees who could not initially afford to own their own homes.
Though a majority of Americans continued to live in rural areas until around World War I, American cities began rapidly growing after 1840. From 1790 to 1840, the urban share of the American population had barely doubled, from slightly less than 5 percent to slightly more than 10 percent. In 1840, New York, Philadelphia, and Boston—still the nation’s three largest urban areas when “suburbs” such as North Liberties and Charlestown are included— housed just 4 percent of the population, and only 20 cities had more than 20,000 people. Still, the 1840 census was the first to find more than 100 communities of more than 2,500 people each—there were just 90 in 1830.
After 1840, the urban share of the nation’s population began growing by about 5 percent per decade, so that it nearly doubled to 20 percent by 1860, doubled again to 40 percent by 1900, and doubled again to nearly 80 percent by 2000 (see Figure 3.1). This growth increasingly made urban homeownership rates the heart of our story.
New transportation technologies—the steamboat after 1810, the canal after 1820, and most importantly the railroad after 1830— stimulated the explosive growth of the cities. By greatly reducing the costs of moving raw materials to factories and finished goods to consumers, these new forms of transportation increased industrial production and the demand for workers in urban areas.
If transport and industry provided