The Mystery of Capital by Soto Hernando De

Author:Soto, Hernando De [Soto, Hernando De]
Language: eng
Format: mobi
Publisher: Basic Books
Published: 2003-07-07T22:00:00+00:00

Lawlessness or a Clash of Legal Systems?

At the beginning of the nineteenth century, the property system of the United States was in a state of disarray. Existing property law and antagonistic legislators only exacerbated the crisis facing the nation’s migrants. In his seminal study of squatters and land laws in Virginia and Kentucky, Paul Gates argues that the formal law contributed to “ever growing costs of litigation to clear titles, eject persons with rival claims, and protect land from intrusion and plunder.” Combined “with court fees and the high interest on borrowed capital,” the inadequacy of formal law was a “constant threat to the security of investments and kept litigants in continued turmoil.”74

Predictably, the migrants who settled these lands, more often than not, did not have formal title to their property and usually ended up having to negotiate for the title with not one but two owners; and then even after they had purchased the land and made their improvements, they were likely to be faced with ejectment proceedings brought by others with prior rights to their tracts.75 One foreign visitor traveling through Kentucky in 1802 noted that at every house he stopped in, the owner expressed doubt about the soundness of his neighbors’ titles.76

Between 1785 and 1890, the United States Congress passed more than five hundred different laws to reform the property system, ostensibly based on the Jeffersonian ideal of putting property into the hands of private citizens. The complicated procedures associated with these laws, however, often hampered this goal. To confuse matters further, individual states developed their own rules of property and land distribution that largely benefited and protected only their own propertied elite. As a result, attempts to reform the property system only served to heighten the nation’s land difficulties while making migrants extremely wary about losing what semblance of title they may have possessed. Commenting on reform in Kentucky, one contemporary emphasized that “many of the inhabitants derive the security of their estates from this confusion…[and consequently] many dare not assert their rights, from a fear of being obliged to pay considerable indemnifications.”77 During the eighteenth century and the early nineteenth, “as old problems were solved, new ones emerged. There were chronic difficulties in determining title…[as title became a] concept more elusive than longitude, more nebulous than a tree stump or stream. Title became as vexatious and intractable a subject as the abolished law of tenure.”78 Quite simply, the legal institutions of the United States failed, in fundamental ways, to deal effectively with the burgeoning migrant population.

By 1820, the original U.S. property system was in such disarray that Supreme Court Justice Joseph Story wrote: “Ages will probably lapse before litigations founded on [the U.S. property laws] will be closed…. It will forever remain an unknown code, with a peculiar dialect, to be explored and studied, like the jurisprudence of some foreign nation.”79 The irony was not lost on Justice Story that the United States was “not an old conservative society but a new state at the legal periphery.

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