The Federal Government subsidized the settlement and economic development of the Northwest in a number of ways; first by the chartering of railroads and the granting to the railroads of land grants intended to be used by the railroads for the financing of the intercontinental lines. “Sixty-one separate railroads received federal land grants totaling 131,350,534 acres before Congress terminated the program in 1871.” (Schwantes, 173) The cost of building the railroad tracks varied of course with the terrain but averaged between $20,000 and $30,000 a mile. (Fahey, 23) With each mile the railroad received 20 sections of land (A forty mile wide strip would contain 20 odd sections per mile.), and sell the land for an average of $2.60 an acre cash and more on credit. A cash sale would net the railroad $33,280, or enough to finance the construction. (Fahey, 25) The railroad company would then own the tracks at no cost to itself or its shareholders or creditors. Since the railroads would be crucial to the financial development of Northwest communities, the land grant program was a form of economic subsidize to a large corporation which was intended to "trickle down" to the farmers and merchants.
Federal Homestead Act of 1862
Congress passed and the President signed several laws within the forty years from 1862 to 1902 designed to encourage settlement of the west. The first was the Homestead Act of 1862 which offered 160 acre parcels to settlers who would live on the land and farm it for a period of time. The act offered no credit to farmers however, and provided no means for them to obtain the credit necessary to purchase what they needed to start a farm. (Schwantes, 296) The size of the homestead was appropriate for some parts of the country or too little in others, such as the semiarid regions. “For many, 160 acres were too few for a paying wheat farm; they got additional land by filing under a different law or by deceit.” (Fahey, 6) In 1885, “Land Commissioner William Sparks…alleged that three-quarters of the final preemption entries in Washington had been frauds.” (Fahey, 6-7)
Desert Land Grant Act of 1877
The Desert Land Grant Act of 1877 granted 640 acres to a settler willing to farm and irrigate the land for a three year period, but also did not provide the means for a farmer to obtain the irrigation equipment or build the system needed for delivery of the water. The Timber and Stone Act of 1878 resulted in timber men receiving large tracts of land instead of individual farmers as intended. (Schwantes, 296-7)