Much of the United States was once "public domain" land owned by the federal government and transferred to individuals under laws enacted by Congress. North Dakota and South Dakota are among the 30 states that were formed from the "public domain." Below is a summary of the key methods used to obtain land from the government in Dakota Territory.
Western land squatters asked Congress to grant them the right of pre-empting their claims in advance of the land sale so they would not be obliged to bid for them against speculators. Congress, increasingly responsive to demands of the West, granted pre-emption rights to sixteen special groups before 1830, and between 1830 and 1840 gave pre-emption rights on five occasions to all squatters then residing upon the surveyed lands. The Pre-emption Act of 1841 gave the pre-emption right to all squatters then located or who in the future should take up locations upon the surveyed public lands. This act, although a victory for the West, by no means satisfied the settlers on the frontier. It neither applied to Indian reservations nor to unsurveyed lands; it did not provide for free grants to actual settlers, and it retained the minimum price of $1.25 per acre.. Claimants had to be 21 years of age, head of a family, and a US citizen or have declared intention to become a citizen. Pre-emption is recorded as a "cash" sale. A pre-emption could be changed to a homestead and the settler was credited with his residence time. The Act accommodated settlers who had established themselves illegally on land ahead of government surveyors. When the surrounding land was eventually surveyed and made ready for public sale, the "squatter" had the right to appear at the local land office and purchase up to 160 acres of their illegal holdings for $1.25 per acre to pre-empt or prevent any subsequent claims, as long as the settler could show proof of a dwelling and improvements to the land. The Pre-emption Act legalized early pioneer settlement on unsurveyed lands, and recognized squatting as a legitimate means of establishing a homestead.
Squatters on surveyed lands before and on unsurveyed lands after 1841 were not sure of obtaining pre-emption rights. To provide mutual protection in the absence of such rights they organized claim associations. But such associations were powerless to aid, nor did the pre-emption law protect the penniless settler who was threatened with the loss of his claim if he could not raise the $200 necessary to buy it before the government auction. The pre-emption law remained in effect until 1891, but in the later years it was subject to serious abuses.
The Homestead Act, passed in 1862, opened millions of acres in the public domain for settlement.The passage of the Homestead Act by Congress in 1862 was the culmination of more than 70 years of controversy over the disposition of public lands. From the inception of the United States, there was a clamor for ever-increasing liberalism in the disposition of these lands. From 1830 onward, groups called for free distribution of such lands. This became a demand of the Free-Soil party, which saw such distribution as a means of stopping the spread of slavery into the territories, and it was subsequently adopted by the Republican party in its 1860 platform. The Southern states had been the most vociferous opponents of the policy, and their secession cleared the way for its adoption.
In order to obtain a farm of up to 160 acres almost without cost, an applicant was required to reside on the claim for not less than five years and to cultivate the land. To qualify a homesteader had to be age 21 and a citizen or to have taken out his first papers for citizenship. Soldiers and sailors were permitted to deduct the length of their military duty, up to four years, from the residency requirement. At any time after the first six-months of the five-year settlement period the homesteader could commute his claim to a cash sale. Cash, military bounty warrants or agricultural college script could be used. The Act offered 160 acres of land (80 acres within the railroad grant areas) free to any head of family or person over 21 years of age who was a citizen of the United States or who had filed a declaration of intent to become a citizen in exchange for simply residing on the land for five years and improving it. Quarter sections of land were distributed free, provided the property was lived on and worked for five years. There was also an option to purchase the land after six months of residency for $1.25 per acre. Originally, the Homestead Act applied to surveyed land, but in 1880 it was extended to include unsurveyed land.
In accordance with U.S.-Indian treaties, the government paid persons of mixed ancestry for land that had been granted to them previously, thus opening that land to white settlers. The payments were not made in money, but in certificates called Indian scrip. Each certificate was worth a total of 480 acres and could be used as payment for any vacant public land, whether surveyed or not. Indian scrip was not intended to be sold, transferred or assigned, but, nevertheless, that often happened.
The Northern Pacific Railroad was granted a charter by the Government on July 2, 1864, to build a railroad from the Great Lakes to Puget Sound. The charter specifically forbid the Government from providing any funds to accomplish this daunting engineering task. However, the Government did provide the railroad a very generous grant of land. The land grant received by the Northern Pacific railroad was the odd-numbered sections up to ten miles on each side of the track in states and twenty miles in territories. Imagine a swath of land forty miles wide on a line west from Fargo to Montana. Half of that [the odd numbered sections] belonged to the railroad.The Government owned most of the land in the west and believed that by providing grant of land, the railroad could sell the land. This would both finance the construction of the railroad and encourage western settlement. The total grant of land in what is now North Dakota was over 10 million acres, about one-fourth of the state's area (see illustration below).
Government Land Granted to NP Railroad (USGS Bulletin 611)
The purpose of the grant was not only to provide land for the railroad itself but also land for the railroad to sell to finance the railroad. The land was valuable only if it could be sold and to be sold it had to be valuable. The Northern Pacific solved this dilemma in a number of ways. Selling land in new towns, like Fargo and Moorhead was not too difficult but there could only be so many towns. The real money was to be made selling the virgin prairie to farmers. The railroad advertised the land extensively and created the Bonanza farms to prove the value of the land and stimulate sales.
Some of this land was given by the railroad to establish towns along its route, e.g., Fargo. Most of the land was planned for sale. Unfortunately for the railroad, land sales were slow. Both the railroad and the cities such as Fargo needed migration, settlement, and farming to prosper. Potential settlers did not believe that the land of Dakota Territory was suitable for farming. And there was the weather: winters were thought too cold and summers too dry. In short, the land was unfit for habitation and and no commercial crops would grow there. The railroad, therefore, had to take action to encourage settlement. The task fell to James B. Power.
Mr. Power was made made general agent of the land development, in 1873, for the NP Railroad and promoted to land commissioner in 1875. Power faced not only the public relations problem described but an enormous competitor. Although an enormous amount of land was granted to railroad, the remainder of the land was being granted by the Government to settlers and at a lower price than the railroad was asking (see below).
Some railroad officials did recognize that settlers of Government land did benefit the railroad in the long term by providing freight customers for crops, machinery, etc. However, that did not solve the sort-term cash flow problem. Power's land office tried every trick in the real estate book to lure customers. They offered substantial discounts for quantity land purchases. They offered installment payments for land purchases. They advertised extensively. At first the railroad offered land at $2.50 an acre, with a dicount for quick cultivation. By 1889, it was offereing farm land at $3-$6 an acre and grazing land at $1.25-$4 per acre. Purchaser had up to ten years to pay at 7% interest. Although all these ideas worked, they weren't working fast enough.
Power recommended that spectacularly large farms be established. He believed that the dramatic advertising resulting form the success of such farms would increase sale of land. Not all railroad officials agreed with Power's idea, but Thomas H. Canfield (a member of the board of directors and part of the team that selected the site for crosssing the Red River) supported the idea and suggested to other board members that large farms be established in the Red River Valley to raise wheat. Their success would prove the value of the land and spur sales.
Encouraged by news of bumper crops in the area, Power convinced General George W. Cass (President of the Northern Pacific and namesake of the county) to invest in a large wheat farm. Joining Cass in the venture was Benjamin P. Cheney, another director of the railroad. Cass and Cheney authorized Power to select land for them. In 1874, Power selected 11,520 acres for Cass and Cheney in an area about 20 miles west of Fargo. The Cass-Cheney farm became the first Bonanza Farm.
The railroad was not without competition for land sales. Although the NP railroad owned 25% of what is now North Dakota, the Government owned the other 75% and was equally interested in settlement in the areas newly opened by the railroad. Settlers could obtain land from the Government by using the Homestead Act or the Pre-emption Law.
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