Final answer:
True. William Seward and other northerners during the nineteenth century saw free labor as crucial to economic and democratic development, contrasting with the South's slave-based economy that hindered social mobility and progress.
Step-by-step explanation:
True. The statement that free labor is what encouraged the formation of democracies in the world, attributed to William Seward, relates to the historical belief during the nineteenth century that the free labor system, emphasizing hard work and economic independence, was fundamental to the development of democratic institutions and economic growth. This concept also contrasted with the slave-based economies, particularly in the Southern United States, which were seen as inhibiting social mobility and economic progress. While Seward and other northerners believed in the positive effects of free labor on society and democracy, the specific claim that free labor encouraged the formation of democracies globally can be somewhat contentious and not solely established by Seward.