Land Policy--Grubb--revision--01-05-2010

Land Policy--Grubb--revision--01-05-2010 - U.S. Land...

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1 U.S. Land Policy: Founding Choices and Outcomes, 1781-1802 By Farley Grubb 1 Independence brought a vast amount of land within the grasp of the new nation—land unsettled by non-indigenous Americans. Choices had to be made regarding which governments had jurisdiction over these lands, how these lands would be used to benefit those governments as well as the public, and how these lands would be transferred to white settlers. Conflicts over which governments had jurisdiction over these lands created the first crisis of disunion. The choice that resolved this crisis led to other choices on how to use these lands to salvage the nation’s financial position. How the government would transfer these lands to the public also required choices over lot sizes, shapes, prices, and methods of sale. Between 1781 and 1802 these land-policy choices were truly founding choices in that they had lasting effects on the economic and political trajectory of the nation. This short essay cannot adequately address all the land policy controversies that arose in the founding era. Instead, the focus will be on the key choices that affected economic development for which economic analysis can enhance our understanding. The essay begins by documenting the conflicting claims over the trans-Appalachian territories post-revolution. As a condition of political unity, states without land claims required states with claims to cede them to the national government for the benefit of all. Adopting the U.S. Constitution as drafted in 1787 may not have been possible without this prior solution to western land claims. The timing and amount of lands ceded to the national government from 1781 through 1802 is also documented, with the total being roughly 222 million acres worth about $215 million by 1802. The U.S. 1 The author is Professor of Economics and NBER Research Associate at the University of Delaware, Newark, DE 19716. E-mail: grubbf@lerner.udel.edu . Webpage: http://myprofile.cos.com/grubbf16 . He thanks the other authors of this volume and Max Edling, William Fischel, and Tom Weiss for helpful comments on earlier drafts, and Tracy McQueen for editorial assistance.
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2 Federal Government was born land rich and land-asset-value rich. The national government’s choices over how to use its lands are addressed next. The public, founding fathers, and states all expected the ceded lands to be used to satisfy the debts incurred fighting the Revolution. A government budget constraint model linking revenue and spending flows with stocks of land assets and debt is developed to show the options available for using land assets to service the national debt, i.e. (1) swap all the land at once for as much debt as possible or (2) sell the land slowly over time at good prices with the proceeds pledged to redeeming debt principal. The Federal Government was solvent when land prices were valued at their long-run constant-dollar equilibrium price, but insolvent if valued at prices likely to prevail
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Land Policy--Grubb--revision--01-05-2010 - U.S. Land...

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