Three industries have encouraged economic development throughout the United States and in Southeast Texas. This study examines the impact of real estate, rice, and railroads on national and Southeast Texas economic development. These industries provide significant economic development for the nation and Southeast Texas. In addition to providing transportation, these industries allowed multiple other industries to take advantage of the new-found growth, population, work force, and ability to transfer their goods and services to the market at large at a much faster rate, and to allow companies and individuals to take advantage of demand in places outside of their normal region. The remainder of the paper is organized as follows: Sections 2 and 3 discuss the economic development of real estate and rice, respectively. Section 4 examines the economic impact of railroads. Section 5 provides conclusions and implications.

Real Estate

In the colonial period, land grants enticed Europeans to settle in the American colonies. In South Carolina, the Lords Proprietors acquired lands and allocated them to Landgraves and Caciques, a form of nobility, who controlled the lands (Norris and Cain, 2006).  After the Revolutionary War, North Carolina land grants for Revolutionary War service encouraged settlement in Tennessee in the early 1800s (Griffey, 2011). In Georgia, with anticipation of future economic development, there came the notorious Yazoo Land Fraud. Several Georgia state legislators and US Senator James Gunn from Georgia accepted bribes to pass the Yazoo Act of 1794. The land, in current day Mississippi, was then part of Georgia. Four companies of land speculators: the Mississippi Company, the Georgia Company, the Georgia-Mississippi Company, and the Tennessee Company fraudulently obtained lands given to the Choctaw, Chickasaw, Cherokee, and Creek tribes (About North Georgia). Below is a map of the Yazoo Land Fraud area (Source: Yazoo-Georgia Land Controversy).

James Jackson, the other US Senator from Georgia resigned from Congress and was elected to the Georgia state legislature to fight the land fraud. He was able to positively influence the repeal of the act by the Georgia Legislature on February 18, 1796. James Jackson and others burned the Yazoo Act so that “fire from heaven” started by a magnifying glass may destroy the original act (Mississippi Local History Network). In 1802, President Thomas Jefferson effected an agreement between James Madison, Albert Gallatin, and Levi Lincoln representing the United States and James Jackson, John Milledge, and Abra-ham Baldwin representing Georgia to cede Georgias land west of the Chattahoochee River in exchange for $1,250,000. In 1806, James Jackson died of wounds from attacks and duels related to the Yazoo Fraud. Although the court admitted that the lands were obtained by fraudulent means, in 1810 the US Supreme Court Fletcher v. Peck decision overturned the repeal of the Yazoo Act stating that the land claimants obtained the real estate via a valid contract. The speculators were awarded more than $4,000,000 (About North Georgia). Texas land grants have a long history. In 1716, the first land grant came from the Spanish crown to establish a mission and presidio in East Texas. In Texas, land grants contributed to the settlement of Texas and provided significant incentives for the expansion of railroads in Texas and in the United States. In January 1821, Moses Austin received the first Anglo land grant to settle on the Brazos River. After his fathers death, Stephen F Austin assumed the contract to bring 300 Catholics from Louisiana. Although the grant was voided after the Mexican War of Independence, Austin renegotiated a new contract in 1823. Below is a map of Coahuila and Texas in 1833 (Source: wikimedia.org).

Thereafter, many new settlers came from the American frontier. The Republic of Texas used land grants to encourage settlements, education, and economic development. As a State, Texas used homestead grants to encourage settlement and economic development (Lang and Long). Thus, real estate has been a vital ingredient for the settlement and subsequent economic development of the US and Texas. As we can see in Table 1, farm land was increasingly ever more valuable as transportation and labor became more readily accessible. What once could only be sold in nearby towns and farmers markets could now be transported across an entire state and to other adjoining areas where the urban growth needed the resources.

Average Farm Value Per Acre by Decade in the South 

However, in the United States real estate speculation led to several economic downturns including the Panic of 1797, the 1815-1821 Depression, the Panic of 1837, the 1930s Depression, the savings and loan crisis of the late 1980s, and the recent 2008 recession (Gold-stein). The latest real estate bust suffered from poor judgment throughout the residential real estate spectrum. Buyers did not have to show that they had the means to adequately purchase their homes. Real estate brokers could earn an origination fee without having to service the mortgage. These mortgages and others were sold to Fannie Mae and Freddie Mac who guaranteed the mortgages. Speculation in derivatives based on the flawed mortgages further added to the real estate and financial crisis of 2008. Economic development has resumed given the recent stability in real estate markets nationwide. In Texas, real estate market volatility was limited due to annual restrictions on refinancing. This abated the overly speculative price movements that plagued other jurisdictions.

Rice

Rice needs land with available water, such as the low country of South Carolina or in Southeast Texas. In 1694, Landgrave Thomas Smith introduced rice into the US and South Carolina as a gift from a Madagascar ships captain. Given a gracious reception in Charleston harbor, the captain gave Smith, a former resident of Madagascar, a bag of rice seeds (Lewis, 2013). However, the settlers of South Carolina, mostly Europeans, were inexperienced at farming rice. The Gullahs, slaves from Sierra Leone, were adept at rice farming and commanded higher prices in the slave market than others. Also, the Gullahs adapted to the malaria infested low country of South Carolina (along the South Carolina coast) (Opala). In the 1880s Louisiana and Southeast Texas received rice from Japan. The increased competition from Louisiana, Texas, and others precipitated the collapse of the South Carolina rice economy in the 1890s (Opala). Today Arkansas, California, Louisiana, Texas, Mississippi, and Missouri are major rice producers with an output of 20 billion pounds, of which 50% was exported in 2012 (USDA, 2013). In 2009, US rice farms provided $2.6 billion in value added to the economy and over 36,480 jobs. Total rice production which includes farming, rice milling, and end users (such as brewers) provides over 128,000 jobs and adds approximately $18 billion to the US gross domestic product (Yunich, 2011). Table 2 shows the growing production, and by infe-rence, the need for staples such as rice across all areas of the South and burgeoning urban landscapes of the Northeast of the country.

Average Pounds of Rice Produced

*in 10,000s of lbs 

Major producers of Texas rice are Wharton, Colorado, Matagorda, Brazoria, Jackson, and Jefferson Counties (Texas Almanac, 2012; Shekmohammed et al., 2023).  Although water is a critical resource for rice farmers, in a twenty-year period ending in 2011, rice producers have collectively reduced land and water usage by 21% and 32%, respectively (USA Rice Federation). In times of lower or uncertain rice prices, farmers look to alternative crops: corn in Arkansas and crawfish (“mud bugs” or crayfish) in Louisiana, Texas, and Mississippi. Texas 

Craw fish farming evolved for two major reasons. First, parts of Southeast Texas with hot, low-lying bayous are ideal for rice crops. Second, rice fields provide an excellent environment in which to raise crawfish (King, 1984). Starting with one crawfish farmer in 1977, today, Texas crawfish production has increased to 20 producers of 800,000 pounds of rice over 1,500 acres and an estimated crop value of $1,000,000 (Treece, 2012). While rice is the staple of the south, both cotton and tobacco played a large part in the development of the southern part of the United States, especially after the Civil War. Cotton alone accounted for large investments in port cities such as St. Louis, Memphis and New Orleans. By 1860, an average of 3500 cargo ships were sailing out of the port of New Orleans with approximately $220 million dollars of textiles, mostly cotton, worth about $6.5 Billion in 2014 dollars (Opala). Tables 3 and 4 illustrate the growing industries of both cotton and tobacco as staples in the South. This is due to the ability to transport these products over a long distance into new markets which were not available to them before thanks to railroads and shipping ports. Both of these are sustainable crops that can be grown and harvested and are not anything as perishable as food and grains.

Average Pounds of Tobacco Produced

*in 10,000s of lbs.

The authors would like to thank the administration and library staff at UT Arlington for their help in tracking down some of the material referenced in the article.

No conflicts of interest to note.