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Regulation, Property Rights, and Definition of “The Market”: Law and the American Economy

Published online by Cambridge University Press:  03 March 2009

Harry N. Scheiber
Harry N. Scheiber
Affiliation:
Professor of American History at the University of California, San Diego, La Jolla, CA 92093
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Abstract

This article identifies four problems in the recent interdisciplinary studies of property rights, law, and economic development in the nineteenth-century United States. First, recent studies stress too exclusively the positive functions of law in either the “release of entrepreneurial energy” or the exploitative allocation of advantages (by courts and legislatures) to the business interests leading industrialization. Second, the dichotomy between alleged “instrumentalism” as the prevailing judicial style before 1860 and “formalism” after 1865 has been exaggerated. Third, generalizations have been based too much on the eastern states and Wisconsin. Fourth, there has been a failure to identify accurately the winners and losers in the struggle over regulation and the definition of property rights. Thus, although rediscovery of the importance of institutions by economists and the renaissance of legal history among historians and legal scholars constitute welcome (converging) developments in recent scholarship, much more research is needed on these main themes in the literature.

Type
Papers Presented at the Fortieth Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 41 , Issue 1 , March 1981 , pp. 103 - 109
Copyright
Copyright © The Economic History Association 1981

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References

1 Cf.Gordon, Robert W., “J. Willard Hurst and the Common Law Tradition in American Legal Historiography,” Law & Society Review, 10 (Fall 1975), 9–56;Google ScholarHurst, James Willard, “Old and New Dimensions of Research in U.S. Legal History,” American Journal of Legal History, 23 (01 1979), 1–20;Google ScholarScheiber, Harry N., “Law and American Agricultural Development,” Agricultural History, 52 (10 1978), 439–57;Google ScholarScheiber, , “Federalism and Legal Process,” Law & Society Review, 14 (Spring 1980), 501–60.Google Scholar

2 See, for example, Friedman, Lawrence M., A History of American Law (New York, 1973);Google ScholarHurst, James Willard, Law and Social Order in the United Slates (Ithaca, 1977);Google ScholarScheiber, , “Law and Political Institutions,” in Encyclopedia of American Economic History, Porter, Glenn, ed., vol. 2 (New York, 1980), 487–508;Google ScholarHorwitz, Morton, The Transformation of American Law, 1780–1860 (Cambridge, MA, 1977);Google ScholarMcCurdy, Charles, “American Law and the Marketing Structure of the Large Corporation, 1875–1890,” this JOURNAL, 38 (09 1978), 631–49;Google ScholarScheiber, , “Property Law, Expropriation, and Resource Allocation by Government: The U.S., 1789–1910,” this JOURNAL, 33 (03 1973), 232–51;Google ScholarScheiber, , “Federalism and the American Economic Order, 1789–1910,” Law & Society Review, 10 (Fall 1975), 57–117.Google Scholar See also Diamond, Stephen, “Legal Realism and Historical Method,” Michigan Law Review, 77 (01 1979), 784–94.Google Scholar

3 Compare, for example, Douglass North's view in 1964, in a comment in Explorations in Entrepreneurial History, 2d ser., 1 (Winter 1964), 60–62, with his recent statements on the importance of property rights.Google Scholar

4 U.S. v. Willow R. Power Co., 324 U.S. 499, 502–3 (1945).Google Scholar

5 Hughes, , “Transference and Development of Institutional Constraints upon Economic Activity,” Research in Economic History, Uselding, P., ed., vol. 1 (1976), 47.Google Scholar See discussion of works reflecting the new interest in law, public policy, and institutions in the presidential address of Davis, Lance E., this JOURNAL, 40 (03 1980), 1–31, esp. at 10, 13.Google Scholar

6 [Martin, Albro], “Editor's Note,” Business History Review, 53 (Autumn 1979), 294.Google Scholar

7 See works cited, notes 2–3, supra; articles by McCurdy, , Keller, Morton, Freyer, Tony A., and Libecap, Gary D., in the Business History Review, 53 (Autumn 1979), special issue;Google ScholarWoodman, Harold D., “Post-Civil War Southern Agriculture and the Law,” Agricultural History, 53 (01 1979), 319–37;Google ScholarMcCraw, Thomas K., “Regulation in America,” Business History Review, 49 (Summer 1975), 159–83;Google Scholar and works cited in footnotes of Davis, Lance, this JOURNAL, 40 (03 1980), 1–31,Google Scholar and those cited in bibliography of Scheiber, “Federalism and Legal Process.” Indicative of how even a scholar trained and teaching in law can stumble in dealing with technical matter is the array of errors in Horwitz's Transformation of American Law brought to light in the withering critique by Simpson, A. W. B., “The Horwitz Thesis and the History of Contracts,” University of Chicago Law Review, 46 (Spring 1979), 533–601.Google Scholar

8 For an introduction to the substantive history, from the legal history and constitutional law side, the best approach is McCurdy's, Charles W. analysis of the early California period, in “Stephen J. Field and Public Land Law Development in California, 1850–1866,” Law & Society Review, 10 (Winter 1976), 235–66.Google Scholar Further analysis is in Scheiber, and McCurdy, , “Eminent Domain Law and Western Agriculture,” Agricultural History, 49 (01 1975), 112–30; and Scheiber, “Law and Nature's Bounty: Resource Law in California since 1879” (unpublished paper presented at Law & Society Association meeting, June 1980).Google Scholar

9 Hurst, , Law and the Conditions of Freedom in the 19th Century United Stares (Madison, 1960).Google Scholar

10 Horwitz, The Transformation of American Law.Google Scholar

11 Ibid. On this point, see Scheiber, , “Back to ‘The Legal Mind’? Doctrinal Analysis and the History of Law,” Reviews in American History, 5 (12 1977), 458–66.CrossRefGoogle Scholar

12 Cf.Levy, , The Law of the Commonwealth and Chief Justice Shaw (Cambridge, MA, 1954).Google Scholar

13 Scheiber, , “Law and the Imperatives of Progress: Private Rights and Public Values in American Legal History,” Nomos, 22 (forthcoming, 1981);Google ScholarSelvin, Molly “The Public Trust Doctrine in American Law and Public Economic Policy, 1789–1920,” Wisconsin Law Review (forthcoming, 1981).Google Scholar

14 McEvoy's dissertation is summarized in this issue of this JOURNAL; Robert Higgs's study of law, policy, and technology in the Northwest fisheries is forthcoming in Research in Economic History and was reported in this JOURNAL, 39 (March 1979), 320–21.Google ScholarCf.Hurst, , Law and the Economic Growth: The Legal History of the Lumber Industry in Wisconsin, 1836–1915 (Cambridge, MA, 1964).Google Scholar

15 Horwitz, , “The Rise of Legal Formalism,” American Journal of Legal History, 18 (1975), 251–64,Google Scholar makes the argument for this model. Contra, cf. Scheiber, , “Instrumentalism and Property Rights,” Wisconsin Law Review, 1 (1975), 1–18.Google Scholar

16 Quoted in Nash, Gerald, State Government and Economic Development: A History of Administrative Policies in California (Berkeley, 1964), p. 72.Google Scholar

17 The evidence for this rather sweeping statement rests not only on western court decisions (many cited in Scheiber, “Instrumentalism”), but also on statutes and constitutional initiatives in the Far West (see footnote 8). The quotation is from the decision of People v. Gold Run Co., 66 Cal. 138, 151 (1884).

18 We learned that lesson a quarter century ago, of course, with regard to the proper research strategies for analysis of government and the economy.

19 See Ransom, Roger and Sutch, Richard, One Kind of Freedom (New York, 1977);Google ScholarNash, A. E. Keir, “Reason of Slavery: Understanding the Judicial Role in the Peculiar Institution,” Vanderbilt Law Review, 32 (01 1979), 211–16.Google Scholar

20 That this strategy is essential is manifest, for example, from the success of such recent studies as McCurdy, Charles W., “The Knight Sugar Decision of 1895 and the Modernization of American Corporation Law, 1869–1903,” Business History Review, 53 (Autumn 1979), 304–43. The literature on history of antitrust (for example, Eichner on the sugar trust and Yeager on meat-packing) also illustrates the point.CrossRefGoogle Scholar

21 See Scheiber, “Instrumentalism and Property Rights,” passim.

22 I offer a critique of Horwitz on this score in “Back to ‘The Legal Mind’?” supra n. 11. An introduction to the Far West evidence is in Scheiber, , “Resource Use under California's Constitution,” in Law and California Society: 100 Years of the Slate Constitution (San Diego, 1980), pp. 10–12;Google Scholar and a major California legal controversy supportive of my view is examined by Kelley, Robert in Gold vs. Grain: The Hydraulic Mining Controversy in California's Sacramento Valley (Glendale, CA, 1959).Google Scholar Further supportive evidence is in the rich literature on western irrigation history, surveyed in Lee, Lawrence B., “100 Years of Reclamation Historiography,” Pacific Historical Review, 47 (December 1978), 507–64.Google Scholar

23 This was the burden of my own studies of eminent domain law, for example (see “Property Law,” cited n. 2 supra, and Scheiber, , “The Road to Munn: Eminent Domain and the Concept of Public Purpose in the State Courts,” Perspectives in American History, 5 (1971), 327–402), and there is agreement to that extent with work by Horwitz, William Nelson, and others of that school of legal history.Google Scholar See, inter alia, Presser, Stephen B., “Revising the Conservative Tradition: Towards a New American Legal History,” N.Y.U. Law Review, 52 (06 1977), 700–25.Google Scholar Also, cf.McClain, Charles J. Jr, “Legal Change and Class Interests,” Calfornia Law Review, 68 (03 1980), 382–97.Google Scholar

24 See the studies by scholars in several disciplines in Friedman, Lawrence M. and Scheiber, Harry N., eds., American Law and the Constitutional Order (Cambridge, MA, 1978),Google Scholar and the analytic overview in Hughes, Jonathan R. T., The Governmental Habit: Economic Controls from Colonial Times to the Present (New York, 1977).Google Scholar