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Land Policy: Founding Choices and Outcomes, 1781-1802

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  • Farley Grubb

Abstract

Victory in the War for Independence brought a vast amount of land within the grasp of the new American nation -- territory stretching from the Appalachian Mountains to the Mississippi River between the southern shores of the Great Lakes and Spanish Florida. These lands were initially claimed by several states. Pressure from states without land claims led to these lands being transferred to the national government. The land so transferred was to be used to pay for the revolution. By 1802 this national public domain totaled roughly 220 million acres of saleable land that was worth about $215 million dollars at constant-dollar long-run equilibrium land prices. A public finance approach is used to explain the choices facing the government regarding how to use its lands to pay for the revolution. The first choice -- directly swapping land for war debt -- was superseded by the second choice, namely "backing" the national debt with its land assets and pledging future proceeds from land sales to be used by law only to redeem the principal of the national debt and nothing else. This land policy helped stabilize the national government's financial position and put the U.S. on a sound credit footing by the mid-1790s.

Suggested Citation

  • Farley Grubb, 2009. "Land Policy: Founding Choices and Outcomes, 1781-1802," NBER Working Papers 15028, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:15028
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    File URL: http://www.nber.org/papers/w15028.pdf
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    References listed on IDEAS

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    1. Farley Grubb, 2007. "The Net Worth of the US Federal Government, 1784–1802," American Economic Review, American Economic Association, vol. 97(2), pages 280-284, May.
    2. Donald L. Kemmerer, 1939. "The Colonial Loan-Office System in New Jersey," Journal of Political Economy, University of Chicago Press, vol. 47, pages 867-867.
    3. Farley Grubb, 2006. "Benjamin Franklin and the birth of a paper money economy," Monograph, Federal Reserve Bank of Philadelphia, number 2006bfatboapm, Q1.
    4. Grubb, Farley, 2006. "The US Constitution and monetary powers: an analysis of the 1787 constitutional convention and the constitutional transformation of the US monetary system," Financial History Review, Cambridge University Press, vol. 13(01), pages 43-71, April.
    5. Lebergott, Stanley, 1985. "The Demand for Land: The United States, 1820–1860," The Journal of Economic History, Cambridge University Press, vol. 45(02), pages 181-212, June.
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    Cited by:

    1. Sonia Mittal & Jack N. Rakove & Barry R. Weingast, 2010. "The Constitutional Choices of 1787 and Their Consequences," NBER Chapters,in: Founding Choices: American Economic Policy in the 1790s, pages 25-56 National Bureau of Economic Research, Inc.
    2. Edward L. Glaeser, 2013. "A Nation of Gamblers: Real Estate Speculation and American History," American Economic Review, American Economic Association, vol. 103(3), pages 1-42, May.
    3. Edward L. Glaeser, 2013. "A Nation Of Gamblers: Real Estate Speculation And American History," NBER Working Papers 18825, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
    • N41 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: Pre-1913
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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