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Property Law, Expropriation, and Resource Allocation by Government: the United States, 1789–1910

Published online by Cambridge University Press:  11 May 2010

Harry N. Scheiber
Affiliation:
University of California, San Diego

Extract

Expropriation of private property by government is seldom found on the list of policies which have influenced the course of economic development in American history. To be sure, the once-vigorous myth of antebellum laisser-faire has been discarded; and it is no longer taken as a startling proposition that governmental interventions to promote and regulate the economy occurred regularly throughout the nineteenth century. But for two reasons, I think, expropriation as an instrument of conscious resource allocation has failed to receive from historians the attention it deserves.

Type
Papers Presented at the Thirty-second Annual Meeting of the Economic History Association
Copyright
Copyright © The Economic History Association 1973

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References

This study derives from a larger research project undertaken with generous support from the John Simon Guggenheim Memorial Foundation, the Center for Advanced Study in the Behavioral Sciences at Stanford, and the University of California. Charles McCurdy provided excellent assistance.

1 Scheiber, Harry N., “Government and the Economy: Studies of the ‘Commonwealth’ Policy in 19th Century America,” Journal of Interdisciplinary History, III (Summer 1972), pp. 135151CrossRefGoogle Scholar; Hurst, James Willard, Law and the Conditions of Freedom in the Nineteenth-Century United States (1956, reprinted Madison: University of Wisconsin Press, 1964)Google Scholar; Soltow, James H., “American Institutional Studies: Present Knowledge and Past Trends,” The Journal Of Economic History, XXI (March 1971), pp. 87105CrossRefGoogle Scholar; Bogue, Allan G., “To Shape a Western State: Some Dimensions of the Kansas Search for Capital, 1865–1893,” The Frontier Challenge: Responses to the Trans-Mississippi West, ed. Clark, John G. (Lawrence: University of Kansas Press, 1971), pp. 203234Google Scholar.

2 Corwin, Edward S., American Constitutional History: Essays, eds. Mason, A. T. and Garvey, G. (New York: Harper & Row, 1964), p. 50Google Scholar.

3 Philbrick, Francis S., “Changing Conceptions of Property in Law,” University of Pennsylvania Law Review, LXXXVI (May 1938), p. 723Google Scholar; Corwin, , “The Basic Doctrine of American Constitutional Law, Michigan Law Review, XII (1914), pp. 247276CrossRefGoogle Scholar.

4 Davis, Lance E. and North, Douglass C., Institutional Change and American Economic Growth (Cambridge: Cambridge University Press, 1971), p. 75CrossRefGoogle Scholar. The conventional interpretation of the Granger Cases and the doctrine of property “affected with a public interest” are considered at length and critically examined in Scheiber, Harry N., “The Road to Munn: Eminent Domain and the Concept of Public Purpose in the State Courts,” Perspectives in American History, V (1971), pp. 329402.Extensive documentation is there available for some of the themes treated in this essayGoogle Scholar.

5 Commons, John R., Legal Foundations of Capitalism (1924, reprinted 1959, Madison: University of Wisconsin Press), p. 328Google Scholar. Two Massachusetts studies provide a more accurate perspective on the police power before 1861: Oscar, and Handlin, Mary F., Commonwealth: … Massachusetts, 1774–1861 (revised edition, Cambridge: Harvard University Press, 1969)Google Scholar, passim; and Levy, Leonard W., The Law of the Commonwealth and Chief Justice Shaw (Cambridge: Harvard University Press, 1957), pp. 229281Google Scholar. The numerous valuable studies of Willard Hurst on this and related themes are considered in Scheiber, “At the Borderland of Law and Economic History: The Contributions of Willard Hurst,” American Historical Review, LXXV (Feb. 1970), pp. 744756Google Scholar.

6 Kuznets, Simon, Economic Growth and Structure: Selected Essays (New York: W. W. Norton, 1965), p. 108Google Scholar.

7 See text at notes 29–32, below.

8 Note, “Public Use Limitations on Eminent Domain,” Yale Law Journal, LVI (1949), pp. 605606Google Scholar.

9 No single monograph, even in the literature of legal history, provides a dependable discussion of eminent domain law, accurate and in a conceptual framework useful for analysis in economic history. Uniquely useful is Willard Hurst's case study of public economic policy, Law and Economic Growth: The Legal History of the Lumber Industry in Wisconsin, 1836–1915 (Cambridge: Harvard University Press, 1964), pp. 181ffGoogle Scholar. et passim; see also Cormack, J. M., “Legal Concepts in Cases of Eminent Domain,” Yale Law Journal, XLI (1931), pp. 221261CrossRefGoogle Scholar; and Levy, Law of, the Commonwealth, pp. 118–135.

10 Levy, Law of the Commonwealth, pp. 255–258; Angell, Joseph K., A Treatise on the Law of Watercourses (5th edition, Boston, 1854), pp. 547565Google Scholar; anon., “The Law of Water Privilege,” American Jurist and Law Magazine, II (1829), pp. 2538Google Scholar.

11 Development of the limiting concepts in early jurisprudence, is treated in Grant, J. A. C., “The ‘Higher Law’ Background of Eminent Domain,” Wisconsin Law Review, VI (1931), pp. 6785Google Scholar. See also Nichols, Philip Jr, “The Meaning of Public Use in the Law of Eminent Domain,” Boston University Law Review, XX (1940), pp. 615641Google Scholar. On the philosophical foundations of eminent domain, see Sax, Joseph L., “Takings and the Police Power,” Yale Law Journal, LXXIV (1964), pp. 3676CrossRefGoogle Scholar; and Sax, , “Takings, Private Property and Public Rights,” Yale Law Journal, LXXXI (1971), pp. 149186CrossRefGoogle Scholar.

12 Rogers v. Bradshaw, 20 John. R. 735 (N.Y. 1823) at 740.

13 Hurst, Law and Economic Growth, pp. 181–182; Scheiber, “Road to Munn,” p. 361. Prof. Morton Horwitz has in progress a full-scale study of pre-1860 damage law and liability; I am indebted to him for useful suggestions and comments.

14 Parker, J. (per cur.), Callendar v. Marsh, 1 Pick. 417 (Mass. 1823) at 430.

15 Monongahela Navig. Co. v. Coons, 6 Watts & S. 101 (Penn., 1843) at 115.

16 Smith v. Corp. of Washington, 20 How. 135 (U.S. 1857) at 147–149.

17 The bias of juries in favor of small property owners suffering damages from takings can safely be assumed, I think. Corroborative evidence is in Malone, Wex S., “The Formative Era of Contributory Negligence,” Illinois Law Review, XLI (1946), pp. 155160Google Scholar.

18 Apart from the staggering problem of evaluating the available data as to damages awarded versus market value of property taken, there is the troublesome question of transaction costs: even if property owners arrived at negotiated settlement of damages, when did they do so because the offer made them was fair and when because the costs of litigation (the only alternative) and time considerations were so dear?

19 For a brief period of time after 1840, New Hampshire suspended devolution policy. See Kirkland, Edward Chase, Men, Cities and Transportation: A Study in New England History, 1820–1900 (2 vols., Cambridge: Harvard University Press, 1948), I, 163164Google Scholar.

20 Scheiber, , Ohio. Canal Era: A Case Study of Government and the Economy, 1820–1861 (Athens: Ohio University Press, 1969), pp. 277278Google Scholar Frequent damage awards of one dollar, after offsetting had been figured, occurred in Illinois, as considered in a seminar paper (MS., 1972) by Mark Van Ausdal, University of Chicago Law School. Much later, awards of six cents, after offsetting, became a cause celebre in New York. See New York, Constitutional Convention of 1894, Revised Record (Albany, 1900), pp. 633–635, 651–653. “Oppression” of landowners through damage judgements is discussed in American Jurist, II (1829), p. 33; and, later in the railroad era, offsetting of benefits was singled out as the source of great ‘loss and wrong” in a polemical pamphlet, Eminent Domain and Rail Road Corporations: Some Thoughts on the SubjectBy a Farmer (n.p., Philadelphia, 1873), p. 9 (copy in Eleutherian Mills Historical Library). Cf. Thayer, J. B., “The Right of Eminent Domain,” Monthly Law Reporter, new series, IX (1856), pp. 307312Google Scholar.

21 Newcomb v. Smith, 2 Pinn. 131 (Wisc. 1849) at 138; Angell, Watercourses, chap. xii.

22 Railroad Co. v. Wilson, 17 Illinois 123 at 127 (1856); Brainerd v. Clapp, 10 Cush. 6 (Mass. 1852) at 10–11;.cf. Childs v.N.J. Centr. Railroad Co., 33 N.J.L. 323.

23 Beekman v. Railroad Co., 3 Paige 45 (N.Y. Ch., 1831) at 73; Boston etc. Mill Dam Co. v. Newman, 12 Pick. 467 (Mass., 1832) at 480.

24 On similar grounds, many states had permitted expropriation for building wharves and basins, establishing ferries, draining marshes and swamps, and conveying water to towns. See Scheiber, “Road to Munn,” pp. 367–368; and Thayer, “Right of Eminent Domain,” passim.

25 Boston etc. v. Newman, 12 Pick. 467 (Mass., 1832); Murdock v. Stickney 8 Cush.113 (Mass. 1851); Glover v. Powell, 2 Stock. 211 (N.J. Ch., 1854).

26 Scudder v. Trenton Del. Falls Co., 1 N.J. Eq. 694 (1832). “The landholders adjacent to the Company's works held the key to its prosperity, and a perfect control over it.” Trenton Delaware Falls Co., Second Annual Report (n.p., 1833), p. 12.

27 Boston etc. v. Newman, 12 Pick. 467 (Mass., 1832) at 481.

28 Cooley, C.J. (per cur.), Ryerson v. Brown, 35 Mich. 334 (1877) at 337.

29 West River Bridge v, Dix, 6 How. 507 (U.S. 1848), on which see Scheiber, “Road to Munn,” pp. 376–380.

30 Ibid.; the taking of a franchise was considered again in Richmond etc. Railroad v. Louisa Railroad, 13 How. 71 (U.S. 1852).

31 See sources cited in note 20, above.

32 Mills v. St. Clair County, 8 How. 569 (1850) at 584.

33 Ohio State Constitutional Convention of 1850, Reports and Debates (2 vols., Columbus, 1851), 883893Google Scholar; Cormack, “Legal Concepts,” pp. 244–246 (on the Illinois convention of 1870, debate on consequential damages); McCormick, Charles T., “The Measure of Compensation in Eminent Domain,” Minnesota Law Review, XVII (1933), pp. 492493Google Scholar (on Iowa, etc.); New York Constitutional Convention of 1867–68, Proceedings (Albany, 1868), pp. 32473256Google Scholar.

34 See, for example, Perry v. Wilson, 7 Mass. 393 (1811) on log-boom franchises; Anon., “Rights of the Public in Fresh Water Rivers,” American Law Magazine, V (1845), pp. 267281, on Connecticut and Pennsylvania doctrines; Commonwealth v. Chapin, 5 Pick. 199 (Mass. 1827), on rights in fisheries; and Holyoke Co. v. Lyman, 15 Wall. 500 (82 U.S. 133) (1873), retrospectively, on the same; State v. Tyre Glen, 7 Jones 321 (N.C. 1859); and Scheiber, “Road to Munn,” pp. 373–376Google Scholar.

35 See Fairman, Charles, Reconstruction and Reunion, 1864–88 (Oliver Wendell Holmes Devise History of the Supreme Court, Vol. VI, Part i) (New York: Macmillan, 1971), pp. 9181116, an exhaustive analysis of railroad bond-aid litigationGoogle Scholar.

36 Penn. Coal Co. v. Sanderson, 113 Pa. 126 (1886) at 149; quotation from Hughes v. Anderson, 68 Ala. 280, in ibid., at 139. On railroad immunity from nuisance, compare Penn. Railroad Co. v. Marchant, 119 Pa. 541 (1888), and see generally Orgel, Lewis, Valuation under the Law of Eminent Domain (2nd edition, 2 vols., Charlottesville: Michie Co., 1953), I, pp. 3738Google Scholar.

37 On such Fourteenth-Amendment applications, see Roche, John P., “Entrepreneurial Liberty and the Fourteenth Amendment,” Labor History, IV (1963), pp. 331CrossRefGoogle Scholar.

38 Talbot v. Hudson, 82 Mass. 417 (1860) at 425. Interestingly, the case involved a challenge to the state's condemnation of a dam originally built under the expropriation power by a private canal company.

39 47 N.H. 444 (1867) at 461.

40 Colorado, 1876 Const., Art. II, sec. xiv; cf. Hensel, D. W., “History of the Colorado Constitution in the Nineteenth Century” (Ph.D. diss., University of Colorado, 1957), pp. 167174, esp. p. 169 on Colorado delegates' reference to drainage-works provisions for eminent domain devolution in Missouri and Illinois constitutionsGoogle Scholar.

41 Hicks, John D., The Constitutions of the Northwest States (Lincoln, Neb.: University Studies, XXIII, 1923), p. 146Google Scholaret passim. Bakken, Gordon M., “The Impact of the Colorado State Constitution on Rocky Mountain Constitution Making,” Colorado Magazine of History, XLVII (1970), pp. 152175Google Scholar treats eminent domain debates.

42 Proceedings and Debates of the Constitutional Convention of Idaho, 1889 (Caldwell: Caxton, 1912), p. 304Google Scholar.

43 Idaho Const, of 1889, Art. I, sec. xiv.

44 Dayton Gold & Silv. Min. Co. v. Seawell, 11 Nev. 394 (1876) at 400–401, 411.

45 See, e.g., Highland Boy Gold Mining Co. v. Strickley, 78 Pac. 298 (Utah, 1904).

46 Butte, A. & P. Railroad Co. v. M. U. Railroad Co., 16 Mont. 504 (1895).

47 Stat. quoted in Potlatch Lumber Co. v. Peterson, 88 Pac 430 (Idaho 1906).

48 Ibid, at 431.

49 Oury v. Goodwin, 26 Pac. 376 (Ariz. 1891) at 382 et passim. This topic is a main theme of analysis in Wiel, Samuel C., Water Rights in the Western States (3rd edition, 2 vols., San Francisco: Bancroft-Whitney Co., 1911)Google Scholar, esp. chap. 8.

50 Ibid., I, pp. 148–157 et passim. Unlike western states which followed the Colorado-Idaho liberal line on private use, California and Oregon courts placed strict limitations upon expansion of the public-use doctrine to support strictly private interests. Cf. Gilmer v. Lime Point, 18 CaL 229 (1861), and, inter alia, Wiel, Water Rights. In 1894 the New York constitution was revised to include a provision declaring agricultural drainage to be a “public use,” so as to permit construction of drainage lines across private property on payment of “just compensation.” But the high court of New York State promptly declared the.new provision to be in violation of the U.S. Constitution. (New York, 1894 Constitutional Convention, Revised Record, p. 1061; Matter of Tuthill, 163 N.Y. 133, [1900, 79 Am. St. Rep. 574].)

51 Pumpelly v. Green Bay, 13 Wall. 166 (1872).

52 C.B. & Q. Railroad Co. v. Chicago, 166 U.S. 226 (1897).

53 Clark v. Nash, 198 U.S. 361 (1904); Fallbrook Irrigation District v. Bradley, 164 U.S. 112 (1896).

54 Clark v. Nash, 198 U.S. 367ff.

55 On which problem cf. Hensel, “Colorado Constitution,” pp. 298–300.

56 Hairston v. Danville & W. Railroad Co., 208 U.S. 598 (1907) at 605. The Court also upheld statutes which specifically required offsetting of estimated benefits in appraising damages under eminent-domain takings; cf. Bauman v. Ross, 167 U.S. 548 (1897). On the other side of the same coin, however, the Court reaffirmed and somewhat widened its requirement that consequential damages, when they utterly destroyed “the use arid value” of property, must be compensated; cf. United States v. Lynah, 188 U.S. 445 (1903).

57 Orgel, Valuation, I, pp. 35–38. Many of the same western states as adopted the broadest definitions of public use also were early in the movement to reform compensation law; hence it is all the more difficult to put a dollar value on the subsidy effects of expanded eminent-domain law in the West. What is indisputable is the strategic importance of the expanded doctrine of public use—enterprises were given powerful instruments to set themselves going, and without those instruments would probably have foundered altogether.

58 Cushman, Robert E., Excess Condemnation (New York: Appleton, 1917)Google Scholar covers the subject thoroughly for that period. See also Shurtleff, Flavel, Carrying out the City Plan (New York: Survey Association, 1914)Google Scholar.

59 The best single source of analysis and documentation is Haar, Charles M., Land-Use Planning: A Casebook on the Use, Misuse, and Re-use of. Urban Land (2nd edition, Boston: Little Brown, 1971)Google Scholar.

60 Dunham, Allison, “Griggs v. Allegheny County in Perspective,” Supreme Court Review, 1962 (Chicago: University of Chicago Press, 1963), p. 82Google Scholar.

61 Mimeographed, The White House, January 19, 1972.

62 See text at n. 26, above. The White House policy document discussed above is squarely within the tradition of imposing what are supposed to be American values and institutions “on less fortunate countries,” but particularly when American investment interests are served, a topic discussed in Zevin, Robert B., “An Interpretation of American Imperialism,” The Journal Of Economic History, XXXII (March 1972), pp. 359360Google Scholar.

63 Hurst, Law and the Conditions of Freedom, p. 24 (italics added).