The end of land finance is land privatization…

Ask an interesting question:

Which countries have the largest amount of state-owned land in the world?

Some people may think that this is to send points ah!

It must be us China, we have great socialist public ownership, while other territorial powers such as Russia, Canada, the United States, Brazil, Australia, all have evil private ownership of land, where is any state-owned land area?

Unfortunately, that’s wrong.

According to the latest figures, by the end of 2020, China’s total state-owned land area was 523.338 million hectares, or 5.233,400 square kilometers, accounting for 55 percent of the country’s total land area.

However, in Russia and Canada, 90% of the land is owned by the federal government, which means that 15.4 million square kilometers in Russia and 9 million square kilometers in Canada are owned by the state. In Australia, 87% of the land is owned by the federal government, with a total area of 6.6 million square kilometers.

That would put China in fourth place in terms of land area owned by the state.

Remarks:

China includes Hong Kong, Macao, Taiwan, Aksai Chin and South India occupied territory of 140,000 square kilometers, Russia excludes Crimea of 25,500 square kilometers, the United States excludes all overseas territories and free states of 17,500 square kilometers, India excludes South India occupied Territory of Tibet and Kashmir of 307,800 square kilometers. Argentina does not include 12,200 square kilometers of the Malvinas Islands.

Even in America and Brazil, where land privatization has been deep, around 30% of territory belongs to the federal government.

For example, according to the Federal Bureau of Land Management, the federal government owns about 32 percent of the land in the United States, mostly in the West; About 9 percent of the land is owned by state and local governments, and about 59 percent is owned by private individuals. The other two percent are Indian reservations.

That means that today, the federal government controls about three million square kilometers of national land in the United States.

This graph below is the current distribution of national land in the United States.

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In “The collapse of land finance…We discuss the origin and subsequent collapse of land finance in the United States. Today, we discuss the goals of land finance in the United States.

The Puritans who came to America from England were largely influenced by the ideas of John Locke and William Petty. They believed that

“Land is the mother of wealth; labor is the father of wealth”.

So, if we want to turn millions of square kilometers of western land into wealth, we need to privatize these “own less lands” to individuals, and then develop these land resources, and combine land and labor into wealth.

But again, there are two lines of thought:

1) The government uses land to make money. In this case, of course, it controls the scale of land sale, and the higher the land price, the better;

2) Let more people have the opportunity to buy property through land and form an effective development of land.

There is no doubt that the US federal government chose the second line of thinking from the outset.

If it is the second way of thinking, according to the idea of our Chinese people, we should distribute the land for free, and the big tuna share the land, and not at once privatized to individuals?

That’s not how America’s founding fathers thought.

They argued that the Western territory of the United States was huge, but there were not enough settlers. If the land was transferred to private individuals for free, there would be people who would hoard the land and not develop it, which would not create real wealth. On the contrary, if the land can be sold to the private at a suitable price, the people spend the money, it is equivalent to the investment in it, will be seriously developed, can form real wealth.

In other words, the federal government of the United States believed that:

Do not pay the price and get things, many people will not love dearly;

Only pay a certain price, people will try to create wealth.

From 1785 until the outbreak of the Civil War, the land statutes in the United States were changed every few years to ensure that more people could develop the land. Making money was not the purpose of land finance.

After the land finance basically collapsed in 1840, the federal government began to change its laws to stimulate the land market, from restricting the purchase of too much land to encouraging the purchase and development of more land.

The federal government enacted the Pre-emption Act of 1841, which stated:

Immigrants who own less than 320 acres have the right of first refusal to buy up to 160 acres they have already developed at the lowest price.

The act encouraged poor immigrants to go west, find land that the federal government had not yet sold, and then build houses, graze cattle, or farm (all considered development). When the surveyor of the government comes to sell the land, you tell the government, I have developed the land; you can pay the lowest price.

In 1854, The Graduation Act of 1854 was followed by the Graduation Act, which stated:

Federal land prices, which decline each year with the time the land is on the market, range from a minimum of $2 an acre when it is first listed, to a minimum of $1 an acre (for land that has not been sold for 10 years) to a minimum of 12.5 cents an acre (for land that has not been sold for 30 years).

Why is there a tiered act?

As we all know, whether a piece of land is good or not involves soil, water resources, light and other factors. In the case of a uniform environment, the most important thing is water distribution.

It can be imagined that when land is auctioned, people will choose to buy the best land with water resources first, and then buy the land with less water resources. The plots that remain, mostly barren and lacking water, are of little value for farming or grazing, and people are reluctant to buy them.

Therefore, if the land cannot be auctioned off for a long time, it must be the land with problems, and the price should be lowered.

In 1861, The Civil War broke out in the United States. In order to win the support of western states, President Lincoln promulgated The Homestead Act of 1862, which aimed at distributing the state-owned land in the West to the vast number of immigrants free of charge. It stipulated that:

All citizens of the United States (including women and freed slaves) who are twenty-one years of age and have never joined the rebellion, may obtain, free of charge, for a $10 application fee, 160 acres of uncultivated land, and ultimate title to it, provided they have lived there for five years, and demonstrated improvement in the yield of the land within seven years.

It is no exaggeration to say that this is the most important piece of land policy in American history.

The original intention of the act was to win the support of the middle and lower class immigrants in the West out of war needs. But in effect, the war-driven law distributed most of the nation’s state-owned land to new immigrants almost free of charge, essentially ending the history of federal land finance in the United States.

In 1866, the Southern Homestead Act was enacted. It allowed poor farmers in the (historically slave-governed) South to gain private ownership of Western lands.

In this way, from 1862 to 1900, at least 600,000 families moved into the American West. If they helped the Union army fight, they could get some land and become free men with property. This measure also became an important measure for the emancipation of slaves in the United States. From 1868 to 1900, the federal government allocated more than 80 million acres of land to immigrants, which promoted the identification of western immigrants to the Union and played a decisive role in promoting the development of western agriculture. Since then, the Midwest of the United States has become the “granary” of the United States and even the world.

Why is homestead law important?

This is because, through the Act, 200 million acres of state-owned land were converted into private property, equivalent to about 10 percent of the land area of the United States. This was the most important part of the process of land privatization in the United States, and the foundation of private ownership in modern America.

Moreover, around the end of the American Civil War, in order to further promote the development of the west and the privatization of land, the US Congress passed some supplementary laws one after another, hoping to privatize more state-owned land.

 

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