Author’s note:
This series of blogposts will be my paraphrased notes on a lecture given by Murray Rothbard called “The American Economy and the End of Laissez Faire“. This means the post will contain some word for word transcriptions of Rothbard’s words and some editorializing and rephrasing of my own. I will not distinguish between the two.
Crony Land Redistribution
The anti monopoly movement of the 1860s and 1870s focused on the problems created by Federal land grants to the railroad industry. By the 1880s the movement was calling for price caps on railroad rates (which were never the root of the economic problem) in addition to halting future land grants which was accomplished in 1873. Another outcome of the halting of future land grants was the forfeiture of unused land which in many cases was merely being squatted by corporate speculators. Additionally, increased taxation of the railroad lands was proposed as a part of these movements but never succeeded.
Another large racket that occurred during this period was what happened to Native American lands. Land in these western expansion areas was intended to be homesteaded (recall the 160 acres figure from previous issues), but the Native American lands was more or less up for grabs with no homesteading clauses surrounding it’s use. Railroads were speculating on huge blocks of seized Native American land.
One of the more pertinent examples of this was the Cherokee tract in South Eastern Kansas (nearly a whole quarter of the state), after the Cherokees were kicked out of this land it was sold (approximately $1/acre) by the Federal government in 1868 to a James F. Joy who was colloquially known as “The Railroad King” (at least in Illinois, Iowa and Kansas). The land was sold to Joy in complete disregard for the settlers already living on the property.
Joy was the head of the Kansas City, Fort Scott and Gulf Railroad, and immediately after acquiring the property from the Federal government he began to sell it off at a $2/acre, a tidy 100% profit, back to the settlers who already lived there. Joy was able to negotiate this deal with the Federal government due to a relationship he had with the then Secretary of the Interior (a bureaucratic position of power over the ‘public domain’) Orville Browning of Illinois.
Unsurprisingly, Secretary Browning was a brother in law to James Joy. Browning also represented Joy as his attorney both before and after his appointment as Secretary of Interior, so the two had a close personal & working relationship prior to Browning taking public office.
Another similar situation happened in Kansas to the Osage tribe, approximately 8 million acres of property was seized from these people by the US government.
The Turner Thesis
Frederick Jackson Turner wrote a famous thesis around 1900 called “The Turner Thesis” which called the availability of the unsettled western frontier a “safety valve” in society. That is to say, if citizens did not like regulations or living conditions in the Eastern United States, they were free to move westward and find new opportunities in the more or less free and undeveloped land. This point is extremely important when examining American political & economic history as it greatly distinguishes US territory from places like Europe.
There was an enormous ratio of land to labor in the US at this time. In such conditions, labor is a scarce commodity and unrefined land is plentiful. Thus, labor tends to be very expensive and difficult to acquire whilst raw and unrefined resources (and land itself) is plentiful. The economics of agriculture under such conditions look very different than when the reverse conditions are true. Agriculture is free to employ large tracts of land because land is so abundant.
Contrast this with the agricultural methods of Western Europe where land is very scarce, and one can see that agriculture takes a much more intensive approach to land use (very careful cultivation of every square foot). There is very little land per laborer and thus a surplus of labor.
Cultivation in the United States (especially during this time period but to some degree even to this day) was very extensive (no intensive methods of cultivation per square foot). This often resulted in Europeans visiting American and commenting on the ‘backwardness’ of US agricultural methods, however, such considerations were uneconomical for the average American farmer, in their case the shortage of labor was of much greater concern.
This also affected settlement patterns in the United States versus Europe. European settlements tended to be farms congregated around villages where people lived. American settlement, in contrast, was often much more spread out and thus more sociologically isolated and individualistic.
Another issue (which Turner did not consider) was that westward settlers were most often Yankee Pietists (who if we recall from previous issues carried very legalistic tendencies), in fact, Turner himself was so ingrained in WASP culture that did not stop to think twice about these tenets.
It is important to note that many entrenched power structures strongly disliked the “safety valve” aspect of the western frontier. For example, a fairly large land owner in the North East or the Southern United States would not take kindly to workers bucking working conditions under your regime and moving westward in search of better economic opportunity. You would, instead, prefer that they remain in your locality as a source of cheap labor. Land abundance naturally drives the scarcity & cost of labor up.
Louis Hartz, a famous Harvard historian, wrote a book in 1948 called “Liberal Tradition”. His explanation for why the United States never had a Marxist party, (and essentially was always liberal capitalist) was that the availability of land enabled an avoidance of a feudal land system.
In an environment where labor was already scarce in the United States, this was a death sentence for crony status quo establishments, and this issue actually somewhat feeds into the economic driver of slavery of in the agricultural South (that is until much of this labor requirement was made uneconomical through advances in machinery and agricultural technique). Regardless of the moral issues surrounding slavery (of which there are many and of course they are abhorrent) the real solutions turned out to be one of economics.
