History: American Old West, United States

In theory, the system would provide a fair distribution of land and reduce large accumulations of land by private owners. In reality, speculators could exploit loopholes and acquire large tracts of land. There was no limit to purchases of the unsold land by speculators. Furthermore, settlers often got to the land ahead of the surveyors and became squatters, living on land they held no title to.
As part of public policy, the government would award public land to certain groups such as veterans, through the use of "land script". The script traded in a financial market, often at below the $1.25 per acre minimum price set by law, which gave speculators, investors, and developers another way to acquired large tracts of land cheaply. Land policy became politicized by competing factions and interests, and the question of slavery on new lands was contentious. As a counter to land speculators, farmers formed "claims clubs" to enable them to buy larger tracts than the 160-acre (0.65 km2) allotments by trading among themselves at controlled prices.
The federal government also began to give away land for agricultural colleges, Indian reservations, public institutions, and the construction of railroads. It also gave away land when a territory became a state, and it gave each state 30,000 acres (120 km2) for each senator and representative.
In 1862, Congress passed three important bills that impacted the land system. The Homestead Act granted 160 acres (0.65 km2) to each settler who improved the land for five years, to citizens and non-citizens including squatters, for no more than modest filing fees. If a six months residency was complied with, the settler then had the option to buy the parcel at $1.25 per acre. The property could then be sold or mortgaged and neighboring land acquired if expansion was desired. Though the act was on the whole successful, the 160-acre (0.65 km2) size of parcels was not large enough for the needs of Western farmers and ranchers, and it failed to address the needs of the mining and timber operations as well.