By Allen Guelzo, Ph.D., Gettysburg College
After Europeans flooded through Philadelphia and New York in the 19th century, many of them moved to the West. The federal forces had driven the Indians out of trans-Appalachian lands. It meant there were vast stretches of land ready to be improved and farmed by new settlers.
In 1815 and then 1818, the federal government sold western lands equal in area to the entire state of Connecticut. Those lands once belonged to Indians. Although the immigrants could freely go to the West, they could not purchase any land they wanted. Thus, the government sold the lands to speculators.
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Speculators as Intermediaries of Land Sales
According to federal laws originating from the North West Ordinance in 1787, the sale of land was mandatory. The law also applied to federally owned land. The sales had to be in 640-acre sections sold at two dollars per acre, which is a very low price. But people had to buy the whole 640 acres at once, which added up to a high price. They did not have enough money to buy the land and to farm it.
Therefore, land speculators bought the lands, divided them, and sold each small parcel at more affordable prices to immigrants. These sales were hugely profitable for speculators, which created a land purchase bonanza. In 1819, Congress tried to drive speculators out of this process, which further fueled the bonanza. Congress reduced the price of each acre from $2 to $1.25, cut out interest charges on land purchases, and allowed the minimum purchase to be 80 acres.
Learn more about an economy of slaves.
Squatters and Preemption
Still, people demanded better prices, to the point that some settlers crossed the Appalachians and “squatted” on federal lands. They hoped to gain their title to the land through possession.
By the end of 1828, squatters made up two-thirds of the population of Illinois. In 1841, Congress introduced the process of preemption, which legitimized the titles. Through preemption, a squatter could buy out the title to up to 180 acres of land in his use. It was not real possession, but the squatter could retroactively purchase the land he was farming at $1.25 an acre.
Learn more about the west in the Colonial Era.
Conflicts between Squatters and Speculators
David Rocket is the classic image of this land occupation in the trans-Appalachian territory. He was the Anglo-American brave fighter who had an ax on one shoulder and a rifle on the other. However, rather than pioneers, it was the speculators who settled the trans-Appalachian lands. And they did it with surveying tools and financial wisdom, not with axes and rifles.
When the 640-acre sales stopped, middlemen were needed to facilitate the sales. Moses Cleveland was an agent for the Connecticut land company. He organized sales of land on Lake Erie in Northern Ohio at a dollar per acre and on five years’ credit. Without using an ax, he established the village and then the city, which was later named after him.
Although land speculators were financially affluent, they were unpopular among squatters. Most of the lands that squatters had their eyes on belonged to speculators. They came to squat on the land they thought belonged to the federal government, but they discovered that a speculator or a land company owned it.
Squatters wanted to purchase the lands at the Congress price, but the speculators would not accept because the price was too low, and their work and intervention would not be necessary. Thus, fiery rows started between them. But the role of speculators was significant.
They established the towns of the heartland, lobbied behind the National Republican Program for roads and internal developments, for which they took financial risks. They also served some purposes that they were not aware they were doing.
The insistence of Congress on reducing the cost of land allowed settlers to buy land according to their cash in hand. The Congress price raised the hope of settlers to buy the land that they couldn’t have imagined to possess. Thus, they had the land but could not farm it because they did not have resources, which would lead to the temptation of slave labor. They, in turn, would exert pressure on Congress to revive slavery.
The speculators bought lands, improved them, and raised the price, so the settlers could buy as much land as they could farm. This way, speculators indirectly and inadvertently stopped the spread of slavery in the American republic.
Common Questions about Government Land Sales to Immigrants in American West
Speculators were people who bought the lands that belonged to the government. Then, they would improve them, divide them, and sell each small parcel at more affordable prices to immigrants. They would make massive profits through speculating.
Squatters were settlers who crossed the Appalachians and “squatted” on federal lands. They hoped to gain their title to the land through possession. By the end of 1828, squatters made up two-thirds of the population of Illinois.
In 1841, Congress introduced the law of preemption, which legitimized the titles. Through preemption, a squatter could buy out the title to up to 180 acres of land in his use. It was not real possession, but the squatter could retroactively purchase the land he was farming at $1.25 an acre.
Moses Cleveland was an agent for the Connecticut land company. He organized sales of land on Lake Erie in Northern Ohio at a dollar per acre and on five years’ credit. He laid the foundations of the village and then the city, which was later named after him.
