Download The Growth of the Market Economy

The Growth of the Market
Economy
The Risks of the Market Economy
Commercial Agriculture opened up new opportunities and
risks
No control over distant markets
Time interval (often long) between harvesting and selling a
cash crop
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Commercial Agriculture forced farmers into short term
and sometimes long term debt which was often worse than
expected
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Borrowed to buy land, plant crop, equipment, etc.
The Growth of the Market Economy
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The Growth of the Market Economy
Did the problem lie in the federal
government’s inability to transfer the public
domain directly to the hands of the small
farmers?
The Growth of the Market Economy
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Federal Land Policy
Early Policy – Sectional and Partisan
Policies passed between 1796 and 1820 each
of which tried to undo the damage of its
predecessors
Desire for orderly settlement led to
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Land Ordinance of 1785 (640 acre)
The Growth of the Market Economy
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Federal Land Policy
Federalists did not desire mass movement west
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Political base was in East
Reluctant to encourage movement west
Wanted revenue
Gained revenue from sales to land speculators
Federal law passed in 1796 kept parcels at 640
acres and one year to pay - so that few small
farmers could afford land
The Growth of the Market Economy
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Federal Land Policy
T. Jefferson and Dem. Rep. took a different
path
Believing farmers to be backbone of nation
Law of 1800 reduced parcel to 320 acres and 4
years to pay (min price still at $2)
1804 – 160 acres ( $1.64)
1820 – 80 acres ( $1.25)
1832 – 40 acres
The Growth of the Market Economy
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Federal Land Policy
All land in public domain was sold at auction
for much more than gov’t price.
Speculators knew that farmers could clear no
more than 10 to 12 acres a year.
They continued to sell for a profit.
The Growth of the Market Economy
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Federal Land Policy
Available credit after the War of 1812 fed
speculation
Second National Bank of the United States in
1816
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Increased money in circulation
Stimulated the chartering of private banks within
individual states (state banks).
Circulation of all banks grew from $45 million in
1812 to $100 million in 1817.
The Growth of the Market Economy
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Federal Land Policy
Banks were not always founded with large
amounts of capital or as a sound investment,
but as a way to lend money to the investors for
land speculation.
Orgy of land speculation between 1815 and
1819.
The Growth of the Market Economy
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The Speculator and the Squatter
Claims associations
Pressured congress to allow them Preemption
rights – the right to purchase at the minimum
price land that they had already settled on and
improved.
Seeking to undo previous damage, Congress
passed special preemption laws for squatters in
specific areas and finally, in 1841,
acknowledged a general right of preemption.
The Growth of the Market Economy
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The Speculator and the Squatter
Could not be used on speculators land.
Many farmers exhausted their lands quickly
with cash crops trying to pay speculators.
Farmers had to keep moving in search on new
land – “the moving frontier”.
The Growth of the Market Economy