Final answer:
The Homestead Act encouraged westward migration by offering free land, but the economic difficulties faced by settlers, including high transportation costs and low produce prices, contributed to many small farms failing while larger farms succeeded. This helped transform the West into settled states and played a role in the 'closing of the frontier' by 1890.
Step-by-step explanation:
The Homestead Act of 1862 had a significant economic impact that contributed to the 'closing of the frontier' in the late 19th century. As settlers moved westward, they received 160 acres of free land but faced high costs for farm necessities due to limited access to markets and high transportation fees from railroads. To cover these costs and investments in their homesteads, settlers often went into debt with banks that charged high-interest rates. Adding to the economic challenges, the increase in the number of farmers and subsequent overproduction led to a decline in the market price of produce, further complicating the settlers' financial situations.
Despite these hardships, the act promoted westward migration and farming, which increased agricultural output. However, the success rate among homesteaders was varied; some established profitable operations through economies of scale, while many others struggled to eke out a living. The act also facilitated the transformation of the Western region into organized states, leaving only a few areas like Oklahoma, Arizona, and New Mexico as remaining territories by the end of the 19th century.
The combined effect of widespread settlement and the economic difficulties encountered by small farmers led to the exhaustion of the available land and the emergence of larger farms. Thus, the promise of free land and the westward migration that it incited ultimately played a role in the 'closing of the frontier' as declared by the Census Bureau in 1890, signifying the end of the era of westward expansion.