How Jefferson Democrats, Lincoln Republicans and FDR Democrats Created Distinctly Different Economies By Focusing on Different Limits

Democrats from Jefferson (1801 to 1809) to Buchanan (1857 to 1861) treated land as the limit and acquired a stunning amount - 2.1 million square miles after the country's founding. How much land did the Democrats add? An amount roughly double the size of India or Argentina. That's what they added.

The Republicans did not acquire more land. Their plan was instead to develop it. (Although when the Democrat Andrew Johnson became president after Lincoln's assassination, he - in classic Democratic fashion - acquired some land: Alaska, which added another 663,000 square miles.) Republicans' homestead act of 1862 enabled settlers to acquire 160 acres of public land in the west. Aspiring farmers took advantage of this, claiming on average more than ten million acres each year between 1870 and 1920. The point of the Homestead Act was not to acquire new land but to develop the land already within the borders.

The innovation unleashed by Republicans in industry is well known - the oil, steel and factories of the late 1800s and early 1900s. What is less known is the innovation in farming. Republicans funded land lease colleges throughout the country; these were tasked with helping farmers to become more productive. And even there, innovation was rampant. Less than 10 percent of the acreage planted in wheat in 1919 consisted of varieties that U.S. farmers had sowed before Republicans took over. This biological innovation seems to have accounted for about half the gain in labor productivity in the last half of the 1800s. (The other half was driven by new machinery, capital being added to land to modernize farming.)

The introduction of national currency and more banking and securities regulation (for instance, companies listed on the NYSE had to file annual reports after the 1890s) emboldened investors to back new ventures. Corporations grew in size and number. By 1925, there were 20 times more corporations than there had been in 1870.

Financial markets grew as well. In 1865, bank loans were about $518 million; by 1920, they were $28 billion. On one day in 1831, 31 shares were traded. 31. Not 31,000. 31. On one day in 1901, 3,234,339 were. 100,000 times as many shares.
The metric for economic progress shifted from land to capital. Acreage exploded under Democratic governance and capital did under Republicans.

FDR’s Democrats shifted the focus again. This time, shifting from capital to labor. What metric grew at astounding and unprecedented rates as a measure of what these new knowledge workers could do that land or machinery could not? Invent. Create. Create and apply intellectual capital. And what was the simplest metric for intellectual capital? Patents. By 2019, the number of patents was 28X what it was the year FDR became president.