Determinants of homestead claims and the expansion of Western settlement

This article examines the impact economic variables had on the rate of settlement, measured by original homestead claims, in the Western United States. Our results from the estimated panel regressions indicate that the underlying rationale for the Homestead Act, namely that economic factors were important for settlement, was justified. The two most important economic variables, output prices, measured by real wheat prices, and the cost of capital, measured by real interest rates, were statistically significant in explaining the change in the original homestead claims. Furthermore, contrary to previous studies, railroad mileage was not found to be significant. This study also reveals that the location of a homestead relative to the 100th meridian, the traditional boundary of humid and sub-humid areas, had little effect on the response of homesteaders to economic variables.