The Enabling Act
The Enabling Act of 1802 outlined the terms under which new states would be carved out of the public domain land in the country ’ s incorporated territories . One provision of the law concerning the addition of Ohio to the country ’ s rolls provided that 5 % of the proceeds from the sale of public land within the new state would be allocated to its legislature for the construction of roads to and through that newest member of the Union . Throughout the 19th century , Congress revised and extended the law , changing the percentage of the proceeds to be given to a new state and broadening the authorized uses of the funds . By 1896 , the government had granted more than 98 million acres of land to 25 states . They used that acreage for projects such as roads , canals and water reservoirs , and for building an array of public institutions such as non-sectarian schools , specialty hospitals , insane asylums and prisons .
Land Grants for Internal Improvements
As settlers began moving westward to the lands beyond the Appalachian Mountains , it did not take them long to recognize the need for improvements to the undeveloped assortment of roads and rivers that meandered throughout the countryside . The United States Constitution did not specifically authorize the federal government to finance or construct such improvements . But it did reinforce the aforementioned land-for-veterans policy by permitting Congress to dispose of public domain lands as it saw fit .
By 1822 , legislators had come to recognize their ability to use the land grant precedent to satisfy their constituents ’ pleas for help in making much-needed improvements to the country ’ s transportation infrastructure . Providing meaningful quantities of free land to the states and the companies building either a road connecting important towns or a canal connecting strategic bodies of water would certainly enhance the economic health of a region . Doing so would also enhance the value of the government lands adjoining the new transportation artery . The land grant would not be made in a contiguous block on both sides of the proposed road or canal , but in a series of checkerboard tracts on either side of the right-of-way . Using this tactic would
Message from President Grover Cleveland transmitting a letter from the Secretary of the Interior regarding a land grant for the Northern Pacific Railroad , 1888 . The formal era of railroad land grants began with the passage of The Land Grant Act of 1850 .
enable the government to raise additional revenue by selling the alternate pieces of the checkerboard to private parties wanting to take advantage of their proximity to the new transportation artery .
Throughout the 1820s and 1830s , Congress focused its land grant largess on states and companies building internal improvements across Ohio , Indiana and Illinois . As the population continued moving westward in the 1840s , the legislature granted additional tracts of land to support similar transportation projects throughout the region that became Michigan , Wisconsin and Iowa . In the next decade , Congress used the land grant policy to help enhance the transportation network of the states carved out of the territory acquired after the Mexican War . So in the 40-year period from the early- 1820s to the early-1860s , private parties made use of more than 4.6 million acres of land grants to build canals , 3.3 million acres to build hardpacked wagon roads and 2.2 million acres to make navigational improvements on rivers .
Collection of the Museum of American Finance www . MoAF . org | Fall 2020 | FINANCIAL HISTORY 33