The Catalyst of America’s Historic Rise

This is excerpted from a WSJ article on Lincoln. (Full article here.)

Lincoln pressed Congress to enact the Homestead Act. Instead of selling land in the West in large tracts to wealthy investors, as many Democrats in his day had advocated, Lincoln preferred to grant title to 160 acres to anyone who would settle on it and farm it for five years. Thus Lincoln helped Americans who, like him, started on the bottom rung of life but were willing to work hard. It was the opportunity to reach prosperity but not the guarantee of it.

Why is this crucial to our historic success? Because it distributed capital in the form of land to people who had nothing but their labor. Leveraging the desire to work hard with capital resources is the secret to capitalism’s success and in the 19th century the Homestead Act laid the ground for the rise of middle-class America in the Heartland. At the turn of the century many writers and students of American history believed that the closing of the frontier would spell economic and social decline. But they failed to recognize other forms of capital that would be created: human capital leveraged by technology and financial capital. Our world now runs predominantly on skilled human capital and finance. The skills are distributed by educational access, but the finance is being ever more concentrated among the winner-take-all elites. The distribution of financial capital through alternative sources of finance is key to ramping up US economic growth and wealth creation for all. You’re not hearing this out of Washington, especially from our present administration.


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