Property: Land Grants/Mining 22/01/2011 21:27:00

← Land Grants from the Federal Public Domain:

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← Private states ceded land to Federal Government. Fed. Govt. needed
money to pay off Revolutionary War debts.
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← Land Ordinance of 1785: legislation adopted by Congress to help raise
money for rev. war debts by letting fed govt auction off land.
• Mandated a system for surveying and disposing of public domain
lands.
• See chart on pg. 122
• Provided that section 16 of every township was used for public
schools.
o This land was used by territorial govts and states to sell and
lease the land in order to fund public schooling.
 The fed govt was very committed to public schooling.
• Initial sales of land was disappointing, as price was very high. Govt
eventually began to let people use credit.
o There were widespread defaults and forfeitures.
 In 1832, Congress eventually tried to stop getting
money for the land sold on credit.
 Graduation Act of 1854: allowed for progressively lower
prices for any land that did not sell at min price.
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← Squatters: Squatters were basically a problem
• Some states, and eventually the fed govt used a system of
“preemption” where a squatter could purchase the land that they
occupied, thereby trumping the rights of purchasers at subsequent
public-land sales.
• Preemption Act of 1841: granted a general prospective preemption
right on fed land, provided Indian title had been extinguished and
the land had been surveyed.
o Settlers could claim up to 160 acres of land before it went up
for public auction, provided they inhabited it and improved
the land, constructed some kind of dwelling on it, and agreed
to pay the min price of $1.25 per acre.
 o Preemption Act was abused (for example, logging co’s would
use dummies file preemption claims for timber land).
• Squatters would band together to form claims associations as
another tactic to secure legal title to the land they occupied.
o Designed to prevent competitive bidding at auctions.
o These associations likely had an even greater impact on
securing land for squatters than preemption laws.
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← Homestead Act of 1862: allowed any citizen to claim 160 acres of
unsold surveyed land. If the homesteader inhabited the land and cultivated
it for 5 years, then he received the title to the land with any payment, other
than filing fees.
• Advocates of this Act likes it because it would draw surplus labor
from the East. This would help raise wages for the poor who
remained behind, and would act as a “safety valve” against urban
unrest.
• Only one homestead could be acquired per family, but you could
get 160 acres by homestead act and another by preemption.
• Homesteaders could get title to land quicker if they converted claim
to preemption claim and paid $1.25 per acre.
• Later, homestead acts authorized larger claims for 640 acres.

Veterans were also given land. Companies were given land to build
turnpikes, canals, railroads, etc.

Timber Culture Act of 1873: special grants were given to settlers who agreed
to plant trees on the prairies.
• Desert Land Act of 1877: special grants were given to settlers who
agreed to irrigate deserts.
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← Eventually, by the late 1800’s, settlement began to slow down. Good
land was beginning to run out.
• National Forest System in 1897: huge tracts of forested land were
reserved by presidential proclamation.
• National Park System in 1916: huge tracts of forested land were
reserved by presidential proclamation.
 • Taylor Grazing Act of 1934: closed off all remaining public domain
from further private entry.
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← The Mining Camps:
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← Many of the mining camps between 1848 and 1890 were too remote
for any real govt regulatory system.
• As a result, the miners created their own rules to avoid violent
contention for control.
• Miners quickly formed over 600 mining camp govts to devise local
rules for recognizing and enforcing private mineral rights.
o These rules were eventually incorporated into state
legislations and judicial rulings.
o They were specifically recognized in the fed Mining Laws of
1866 and 1872, which allowed for the private patenting of
federal mining land.
←
← Mineral rights agreements were completed rapidly and were refined
repeatedly to avoid some of the losses of an open access or common pool
resources. Here’s why:
• First, the expected aggregate gains from the establishment of
private property rights were large, and most of the contracting
parties expected to share in those gains.
o Concessions could be made in bargaining within the mining
camps and among politicians within the state legislatures to
reach agreement without disruptive distributional conflicts.
o The possible losses from the absence of any recognized
ownership of the mineral lands provided the incentives for
miners to agree on mineral rights arrangements.
o Due to the value of the land, violent competition was likely.
o Secure mineral rights were needed to promote investment.
o Problems of insecure tenure became even bigger when
surface ore, which could be accessed with little capital, was
depleted and mining turned to more capital-intensive
activities.
 • Second, the number of contracting parties typically was small,
perhaps 20-30 individuals in an early mining camp.
o Groups were relatively homogeneous, and had similar ideas
about how to run things.
o Additionally, there were no other competing interests in the
land that needed to be reconciled.
 This allowed states and legislatures to make rules
without worrying about conflicts.
• Third, there were no known critical informational asymmetries
among the contracting parties regarding the valuing and marking of
individual claims.
o Info about the land more or less evenly spread because
agreements were made before land development.
• Fourth, most of the contracting parties expected a share in the
aggregate gains from establishing property rights.
o This expectation was because of 2 factors:
 1. The valuable ore deposits were believed to be
extensive relative to the number of claimants.
 2. There was a political consensus in the US that fed
land should be distributed quickly and at a low cost to
individuals on an egalitarian basis.
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← The great gold rush to California changed things. Suddenly, everyone
wanted land and it wasn’t realistic or feasible for fed govt to try to keep it.
• In 1866, the first fed mineral rights laws authorized the transfer of
title to private claimants.
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 22/01/2011 21:27:00
← Timeline:
←
← Land Grants:
← 1785: Land Ordinance
← 1841: Preemption Act
← 1854: Graduation Act
← 1862: Homestead Act
← 1873: Timber Culture Act
← 1877: Desert Land Act
← 1897: National Forest System
← 1916: National Park System
← 1934: Taylor Grazing Act
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← Mining:
← 1866/1872: Mining Laws
 22/01/2011 21:27:00
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