Abstract

The first land grant act for a transcontinental railroad and the Homestead Act were both passed in 1862. Each gave away massive federal lands, created incentives to rush construction and settlement, and (at least partly) dissipated land values. I argue that these apparently wealth-reducing actions rationally utilized railroads and settlers to establish meaningful federal ownership over the frontier and allowed for future federal land sales to take place. This paper examines the tenuous US sovereignty in the West, the institutional details of the land grants, and (using newly digitized records) the relationship among railroads, homesteads, and cash sales to test the theory that “giving away an empire” was a rational strategy to establish economic property rights through quick occupation.