Final answer:
Speculators exploited the Homestead Act by buying up large quantities of the free land offered by the Act, only to then resell that land at significantly higher prices. Instead of using the land for farming or settlement as intended, these speculators aimed for quick financial gain, often triggering a cycle of boom and bust in various regions.
Step-by-step explanation:
Speculators took advantage of the Homestead Act by buying up large tracts of land with the intent to sell them at a higher price, rather than to settle and farm as the Act intended. The Homestead Act, passed in 1862, offered up to 160 acres of federal land free to any family who would reside on it and improve it over five years. However, these speculators would often ignore the intention for farming and improvement and instead saw an opportunity for financial gain.
While many struggled with the challenges of turning the wild land into productive farms, speculators saw it as a get-rich-quick scheme. The increasing population and demand for land drove up the prices. By manipulating the situation, speculators were able to buy the land cheaply and later sell for exorbitant prices. Speculation like this was especially rampant in areas with boom industries, like gold and silver mining.
Subsequently, this led to a cycle of boom and bust in various areas, as speculators inflated land prices and created a bubble that inevitably burst. This had a significant impact on small farmers, who found it increasingly difficult to procure land for farming.
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