Thursday, April 17, 2014

Cattlemen and Libertarians - Part 3

Black Rock Lava Flow, White Pine County, Nevada
If you haven't read the previous two installments in this series, now's a good time:
In the previous two posts, I spent some time exploring the history of Nevada land ownership while using Cliven Bundy's case - now sort of settled, with the BLM "concluding the cattle gather", at least for the moment. One question that came to mind after exploring the Homestead Acts and the relatively permissive land claim regime in place until the 20th century was why, exactly, did nobody bother to claim most of Nevada's land? After all, mining activity was a constant through most of Nevada's history, and ranching clearly used the public land, so why didn't more people fence some off and keep it for themselves?

The short answer: Water.

The long answer, well...

The aforementioned Homestead Acts all had one goal in mind - spur American settlers to farm the west. Thomas Jefferson was famously pro-agriculture, and many other Founding Fathers shared his sentiment. To drive home the point of how serious they were about their advocacy, here's Benjamin Franklin on agriculture:
“There seem to be but three ways for a nation to acquire wealth. The first is by war, as the Romans did, in plundering their conquered neighbors. This is robbery. The second by commerce, which is generally cheating. The third by agriculture, the only honest way, wherein man receives a real increase of the seed thrown into the ground, in a kind of continual miracle, wrought by the hand of God in his favor, as a reward for his innocent life and his virtuous industry.” 
(Positions to be Examined, Concerning National Wealth, 1769)
Note that "commercial activity" - the simple act of selling goods and services to another individual - was frowned upon, a radical departure from modern sensibilities. At the time, this was a relatively new view of an old idea, one that dates back to Biblical exhortations supporting pastoral animal husbandry over the more settled farm and city life, and it shaped American land policy and politics well into the 20th century. In fact, due to agricultural labor requirements, the vast majority of Americans were farm workers - urban Americans didn't outnumber rural Americans until after World War 1. It wasn't until after the Civil War that urban Americans even accounted for a quarter of the United States' population. There were also political concerns to address, both geopolitical and domestic - widespread settlement and farming established the United States' hold on its existing territories and helped assume control over less-populated neighboring areas. Also, it's hard to go wrong, politically, pandering to addressing the needs of over 75% of your electorate. To that end, most of the 19th century was spent, politically speaking, attempting to serve the needs of current and future farmers of America, at least until the mechanization of agriculture created an economic and political crisis that nicely mirrors our own. Mining, on the other hand, was dirty, mechanical, and communal - even during the California Gold Rush, the idea of a lone miner wandering into a stream to make his fortune was largely apocryphal. Mining, especially using the technology and attitudes of the time, was a messy affair* that polluted indiscriminately downstream, left piles of dirt all over the place, required cooperation with finance to purchase the necessary machinery (a prerequisite that was largely frowned on through most of American history, especially after the Panic of 1819 and the rise of Andrew Jackson), and employed semi-nomadic ruffians that followed the ore instead of doing sensible things like planing roots in a local community, getting married, raising a barn, planting some crops, and supporting several farm-raised children. Consequently, national policy regarding mining was, at least initially, less than friendly, focusing more on preventing mining and its supporters in commerce from somehow siphoning wealth from the productive agricultural class while buoying the wealth of small farmers.

There were two innovations at the policy level that helped agriculture prosper at the expense of mining interests, at least initially. The first was the Land Acts, which allowed individuals to stake claims to large plots of land - at least 80 acres for purchase after the Land Act of 1820, with larger plots available for free upon the passage of the Donation Land Claim Act and the Homstead Acts. The second was the institution of private mineral rights. Because mineral rights in the United States were usually transferred with surface rights, mining companies often had to negotiate with several private land owners to secure the rights to a viable ore veins, complicating initial extraction efforts. Since all it took to disrupt operations was for a single surface owner to refuse to sell their mineral rights, the risk involved in setting up a mine in the United States was non-trivial.

Mexico's attitude regarding mining and private property, however, was very different. While the English settlers that colonized the United States displayed and almost worshipful reverence for agriculture, the Spanish settlers that initially colonized Mexico and the rest of Latin America were at least as interested in gold and other minerals as they were in agriculture and governed accordingly - this even-handedness led to silver being Mexico's primary export from the late 16th century until the 1870's and also led to New Spain having a significantly more industrial and urban character than the United States, at least until the political chaos in post-independence Mexico wiped out those gains. Mining in New Spain and Mexico was governed according to the Ordenanzas de Mineria, which declared that all mineral rights belonged to the sovereign and could be leased to miners in exchange for a cut of the profits. Since Mexico's revenue had fallen precipitously after independence owing to continual political and military strife, the Mexican government maintained a relatively laissez-faire attitude when dealing with prospectors in the country. Consequently, prospectors could simply stake a claim on some public land, register the claim with whatever local government official happened to be around at that moment, and get to work. In return, they provided a percentage of whatever they mined to the local and national government. The result, at least when the government was stable and cooperative, was a relatively quick and painless method for securing the right to extract minerals without dealing with the legal and procedural overhead of actual land ownership**. Better yet, at least from the point of view of the miner, even if a landowner had a claim on a particular piece of property, they lacked mineral rights - consequently, miners could legally tunnel under farms and other private surface property, provided they had permission from the sovereign.

After the Mexican-American War, the United States signed the Treaty of Guadalupe Hidalgo, which required the United States to honor original titles previously granted by Mexico. Though the United States' willingness to honor that clause was every bit as limited as Mexico's ability to enforce it***, the United States did find it in its best interests to preserve the original Mexican mineral rights regime in California, in which gold was discovered right after the signing of the treaty. Since a civilian American-style government hadn't been installed in California yet, miners adapted what legislative rules were present at the time and largely stuck to the practices established in the area by Mexico. This meant working on claims staked on public land, assigned on an informal first-come, first-serve basis, without contesting or attempting to otherwise claim title to the public lands via adverse possession or homesteading. From a practical standpoint, this was the only realistic solution - from 1847 until statehood was achieved in 1850, California was governed variously as a constituent part of Mexico's Alta California territory, to the Californio-led Bear Flag Republic, to a series of military governors that were primarily tasked with settling original Mexican land claims and pacifying the Native American populations. In short, nobody was around to confirm, record or transfer title, so it wouldn't have done the 49ers any good to try. Luckily, the original Spanish and Mexican mineral rights system was well-suited for the near-absence of government at the time****.

Despite the success of the Mexican-style mining regime in California, it took some time and debate before the United States formally accepted the practice. Once it did, though, the United States did so with gusto; with the passage of the General Mining Act of 1872, the United States decisively adopted leasing over parcel sales as the preferred method of managing mineral extraction on public lands. Though there was some movement to switch back to a private property-based approach, the Timber and Stone Act was swiftly abused and ultimately repealed. Once repealed, the window for mining interests to legally purchase public lands came to an end. This actually proved to be a benefit for the mining industry - since the General Mining Act of 1872 fixed mine claim fees without automatically adjusting for inflation, it's actually far cheaper these days for mining companies to pay the per-acre fees to the federal government than it would be to pay property taxes for private property. Furthermore, mines on public lands don't have to worry about finding buyers for non-productive land once the ore has been removed; even without the United States' current environmental laws, few people want to buy a tunnel-laced or pit mine scarred plot.

Even with modern mine reclamation, land in Nevada has one serious issue, at least if you want to do anything economically interesting on it beyond, "Build a house in the middle of nowhere and stare at the scenery" - there's no water. Going back to Cliven Bundy's case, he had roughly 1,000 cattle grazing on 600,000 acres, a density that the BLM viewed as threatening to local wildlife. That means that 600 acres can barely support one cow, which, if you look at land that appears something like this, sounds about right:

"No services next thousand miles", Michael McLeran,
Part of the problem is that sagebrush is ordinarily toxic to cattle in a similar way that lactose is toxic to humans that lack the LCT gene, only there is no similar gene for cattle. Since sagebrush contains chemicals that are hostile to the bacteria in the guts of cattle, cattle will usually avoid it and will instead feed near-exclusively on the grass surrounding the sagebrush. This causes serious issues, especially in more arid climates like Southern Nevada, since cattle can eat all of the easy-to-digest food in an area, effectively clearing the way for sagebrush to overwhelm an area and prevent future grass growth. There has been some work recently to introduce a form of "sagebrush tolerance" into cattle, but it's still in experimental stages. Consequently, most of Nevada is sorely lacking in food that cattle will actually touch. Adding insult to injury, cattle also require water - not surprisingly, in a state that receives less than eight inches of precipitation annually, and especially in Southern Nevada where precipitation averages half of that, water is in very short supply. Though it's sometimes possible to tap underground aquifers to supplement virtually non-existent surface water supplies, they rarely refresh quickly enough to do much good, and even when they do, they're often stressed to the limit and beyond. Consequently, even if the BLM is wrong about its calculations and it's possible to support, say, two cattle on 600 acres near Bunkerville, that's still not nearly enough to economically support a Desert Lands Act homestead*****.

The big takeaway here is that, frankly, most of Nevada's land isn't capable of generating enough value on its own to pay for property taxes, much less support anything remotely economically interesting, unless there's ore underneath it - and once the ore is exhausted, the value of the land is also exhausted. Consequently, mines really don't want to own property in Nevada and ranchers can only afford land in Nevada if it's heavily subsidized. Given that the BLM's current fee of $1.35/animal/month was too rich for anyone in Bunkerville to pay (Cliven is the last cattle rancher in Clark County), it's pretty safe to conclude that, with or without BLM interference, most of Nevada's land is marginal at best. Even with today's technology, even if the BLM had the same attitude regarding land patents as the original General Land Office, most of Nevada is simply impossible to homestead.

Now, would private ownership of public lands potentially lead to innovative new uses for the land that don't involve agriculture, ranching or mining? Probably, and I think we should absolutely encourage that to happen. However, it's important to note that nobody's beating down the doors to make that happen, and for good reason.

* It's no accident that many Superfund sites in the west are former turn-of-the-century mine sites, like the Carson River and French Gulch. Environmental protections of the day boiled down to, "Is it water soluble?" and, regardless of the answer to that question, "Great! Toss it in the river and let God sort it out". Needless to say, this is a less-than-ideal way of disposing of toxic waste in a region that has no external drainage.

** Interestingly, the tables have turned on these regulatory approaches in the past 200 years. Private mineral rights might complicate mineral extraction efforts when compared to a willing sovereign and a supine surface population, but it also guarantees that some of the mineral profits end up in the hands of landowners, reducing the political threat of NIMBYism, and also reduces corruption by keeping mining fees out of government coffers. There are good arguments that the reason fracking took off faster in the United States than elsewhere is in part due to private mineral rights. Private mineral rights also make it significantly more difficult for populist governments to nationalize ore extraction industries, a common pastime in what used to be "mining friendly" Latin America.

*** It wasn't quite "none at all", but to call the record "mixed" would be giving Congress too much credit. As usual, it was the Native Americans that suffered the most. Note that, contrary to the popular "Columbus and the Spaniards were evil" narrative these days, the Spanish and Mexicans were downright progressive regarding aboriginal title and openly recognized the property rights of Native American tribes like the Pueblo in New Mexico; contrast this to the United States' policy of "Indian removal".

**** This historical example helps demonstrate that strong common law-backed property rights and anarchy, at least as defined as "the absence of publicly enforced state institutions", rarely play nice with each other. Remember that the next time you find yourself arguing with an Anarcho-Capitalist.

***** If you clicked that link, you'll discover that the Desert Lands Act hasn't been repealed and it's still technically possible to make a claim against the BLM for a homestead. Good luck coming up with a site that will meet their criteria, though. Also note that the Desert Lands Act requires cultivation to establish a homestead, not grazing, which requires even more water and effort.

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