Land grants to subsidize building of railroads for military and economic development purposes were common in the late 1800s. While transcontinental routes were still under construction, Congress turned its attention to a north-south route through Oregon. Between 1866 and 1870, Congress passed and then amended legislation that ultimately resulted in the grant of nearly 4,000,000 acres in Oregon to the Oregon and California (O&C) Railroad Company. The land grant was in exchange for construction of a rail line through Western Oregon from Portland to the California border near Ashland.
As construction progressed, the Railroad Company was to receive alternating sections of land on both sides of the right-of-way spanning 20, and in some cases 30 miles, on each side. The result was a checkerboard band of lands 40 to 60 miles wide the full length of the state that transferred from federal ownership into private ownership by the Railroad Company. The lands conveyed were eventually to be sold by the Railroad Company, but were subject to the conditions they be resold only in 160-acre parcels to “actual settlers” for no more than $2.50 per acre.