Economic Variables and the Development of the Law: The Case of Western Mineral Rights

Much of American legal activity during the eighteenth and nineteenth centuries centered on the transfer of a continent of natural resources—agricultural land, water, timber, mineral deposits—from public to private control. That transfer was crucial for the development of an economic system based largely on private incentives and market transactions. Legal policy at both the state and federal level regarding natural resource ownership and use has been the focus of work by Paul W. Gates, Willard Hurst, Harry Scheiber, and others. Those studies have generally been aimed at describing the nature and impact of governmental support for private economic activities. This paper is concerned with a somewhat different question—the timing and emergence of particular legal institutions (laws and governments). The framework for the study is that offered by Lance Davis and Douglass North in Institutional Change and American Economic Growth. There they hypothesize that institutions develop in response to changing private needs or profit potentials: “It is the possibility of profits that cannot be captured within the existing arrangemental structure that leads to the formation of new (or the mutation of old) institutional arrangements.” Essentially the same model of institutional change is used by some American legal historians, notably Lawrence Friedman and Willard Hurst. They argue that the law can only be understood by examining the surrounding economic, political, and social conditions. Those conditions mold the law, and as they change, they force legal institutions to change. Friedman ties this view closely to the Davis-North model in A History of American Law, where he argues that competing interest groups are the primary determinants of the nature of the law at any one time. This view of legal institutional change is in sharp contrast to the common law tradition of legal history which sees the law as an autonomous institution passed on from generation to generation—an institution that molds the economic, political, and social inputs from society.