1. 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 No control over distant markets Time interval (often long) between harvesting and selling a cash crop Time interval (often long) between harvesting and selling a cash crop Commercial Agriculture forced farmers into short term and sometimes long term debt which was often worse than expected Commercial Agriculture forced farmers into short term and sometimes long term debt which was often worse than expected Borrowed to buy land, plant crop, equipment, etc. Borrowed to buy land, plant crop, equipment, etc.

2. The Growth of the Market Economy The Growth of the Market Economy The Growth of the Market Economy Did the problem lie in the federal governments inability to transfer the public domain directly to the hands of the small farmers? Did the problem lie in the federal governments inability to transfer the public domain directly to the hands of the small farmers?

3. The Growth of the Market Economy Federal Land Policy Federal Land Policy Early Policy – Sectional and Partisan Early Policy – Sectional and Partisan Policies passed between 1796 and 1820 each of which tried to undo the damage of its predecessors Policies passed between 1796 and 1820 each of which tried to undo the damage of its predecessors Desire for orderly settlement led to Desire for orderly settlement led to Land Ordinance of 1785 (640 acre) Land Ordinance of 1785 (640 acre)

4. The Growth of the Market Economy Federal Land Policy Federal Land Policy Federalists did not desire mass movement west Federalists did not desire mass movement west Political base was in East Political base was in East Reluctant to encourage movement west Reluctant to encourage movement west Wanted revenue Wanted revenue Gained revenue from sales to land speculators 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 Federal law passed in 1796 kept parcels at 640 acres and one year to pay - so that few small farmers could afford land

5. The Growth of the Market Economy Federal Land Policy Federal Land Policy T. Jefferson and Dem. Rep. took a different path T. Jefferson and Dem. Rep. took a different path Believing farmers to be backbone of nation 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) Law of 1800 reduced parcel to 320 acres and 4 years to pay (min price still at $2) 1804 – 160 acres ( $1.64) 1804 – 160 acres ( $1.64) 1820 – 80 acres ( $1.25) 1820 – 80 acres ( $1.25) 1832 – 40 acres 1832 – 40 acres

6. The Growth of the Market Economy Federal Land Policy Federal Land Policy All land in public domain was sold at auction for much more than govt price. All land in public domain was sold at auction for much more than govt price. Speculators knew that farmers could clear no more than 10 to 12 acres a year. Speculators knew that farmers could clear no more than 10 to 12 acres a year. They continued to sell for a profit. They continued to sell for a profit.

7. The Growth of the Market Economy Federal Land Policy Federal Land Policy Available credit after the War of 1812 fed speculation Available credit after the War of 1812 fed speculation Second National Bank of the United States in 1816 Second National Bank of the United States in 1816 Increased money in circulation Increased money in circulation Stimulated the chartering of private banks within individual states (state banks). 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. Circulation of all banks grew from $45 million in 1812 to $100 million in 1817.

8. The Growth of the Market Economy Federal Land Policy 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. 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. Orgy of land speculation between 1815 and 1819.

9. The Growth of the Market Economy The Speculator and the Squatter The Speculator and the Squatter Claims associations 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. 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. 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.

10. The Growth of the Market Economy The Speculator and the Squatter The Speculator and the Squatter Could not be used on speculators land. Could not be used on speculators land. Many farmers exhausted their lands quickly with cash crops trying to pay speculators. 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. Farmers had to keep moving in search on new land – the moving frontier.

11. The Growth of the Market Economy