Hardy Cattle and Fuzzy Math, or, How to Make Money in the Texas Panhandle during the 1880s

During the early 1880s, investors across the United States and as far away as Scotland funneled millions of dollars of capital into cattle ranches across the American west. Though enormously profitable for a time, the boom would be short-lived. Following a series of disastrous blizzards in the late 1880s, the western ranching industry collapsed. According to the traditional story of this catastrophe, greedy ranchers had overstocked the ranges. I argue this account is dubious; there was little precise information on how many cattle were actually scattered across western ranges and no clear idea of how many cattle the Plains ecosystem could support. 

 

The boom’s collapse was actually about the interplay between natural and economic forces that cut to the heart of ranching as a nineteenth-century enterprise. Actively monitoring cattle at the time was prohibitively expensive and ranch managers realized that the most profitable strategy was to encourage cattle to fend for themselves. As a result, cattle had to scatter far and wide to stay fed. This meant few ranches had a precise idea of how many animals they owned, despite the seemingly-precise numbers local managers provided far-away investors. As long as nobody looked to closely at these numbers, the system was extremely profitable. But when anxious investors and managers surveyed their herds in the aftermath of the harsh winters of the late 1880s, the realization that there was a mismatch between what was on the books and what was on the ground erased profits and sparked panic. It would be a disaster with far-reaching consequences; the ranching industry collapsed at the same moment that the Chicago meatpacking houses were gaining power, and their divergent fortunes in the 1880s would shape the long-term structure of the beef production system.