U.S. Land Policy, Property Rights, and the Dust Bowl of the 1930s

Abstract

In the morning the dust hung like fog, and the sun was as red as ripe new blood. All day the dust sifted down from the sky, and the next day it sifted down. An even blanket covered the earth. It settled on the corn, piled up on the tops of the fence posts, piled up on the wires; it settled on roofs, blanketed the weeds and trees." John Steinbeck, The Grapes of Wrath (1939, 6) I. Introduction. The process of assigning property rights to land in the American Great Plains resulted in farms that were too small to be economically viable. Under the Homestead Act, hundreds of thousands of 160 to 320-acre farms were founded between 1880 and 1920. These farms were more likely to fail during drought, and because of the cultivation practices used on them, we hypothesize that small farms were principal contributors to the region's most significant environmental crisis, the Dust Bowl of the 1930s. Drought conditions returned to the Great Plains in the late 1950s and 1970s, yet there was no return to the Dust Bowl. New farming techniques and larger farms likely were major reasons. 1 The path dependence resulting from the initial assignment of property rights on the Great Plains was slow to be corrected. The transactions costs of property rights reallocation from homesteads to larger farms were high, in part due to government intervention. Local politicians sought to retain the dense, Midwest-like population that homestead settlement had fostered, and they successfully lobbied the Federal Government for subsidies to maintain small family farms. An abrupt loss of rural population was not politically acceptable. The result was a halting process of farm size adjustment between 1920 and 1982. This case illustrates the difficult environmental problems that can be raised by an inappropriate assignment of property rights. It cannot be assumed that a more efficient allocation of rights with fewer negative environmental effects will occur quickly. As Ronald Coase noted, high transactions costs can impede the