Front Page Titles (by Subject) Timber, Property Rights, and Government - Literature of Liberty, October/December 1979, vol. 2, No. 4
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Timber, Property Rights, and Government - Leonard P. Liggio, Literature of Liberty, October/December 1979, vol. 2, No. 4 
Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.
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Timber, Property Rights, and Government
“Property Rights, Nineteenth-Century Federal Timber Policy, and the Conservation Movement.” Journal of Economic History 39(March 1979):129–142.
Economics teaches that, “given fully-defined property rights, resources will be guided by market allocation to their highest-value user.” Legal restrictions hindering the transferability of resources impose costs termed the “dissipation of rents.” The authors argue that federal timber policy of the late nineteenth century created significant rent dissipation. Congress restricted the transfer to private ownership of public timberland in the Pacific Northwest to 160 acres per claimant. Thus, private lumber companies could not directly buy from the government the large acreage of forested land needed for economies of scale in logging operations.
Before the late nineteenth century and the rise of the conservation movement, most officials considered private property rights as a means of conserving the nation's timber. But conservationists such as Gifford Pinchot argued that a timber famine would results from selfish private interests unless a national forest reserve system was established. Beginning in President Harrison's administration, this government intervention led to eventually over 184 million acres of land being reserved. Yet the real culprit of forestry misuse was not private industry but rather the costly federal land transfer policy. This government policy was restrictive and increased transaction costs in assigning private property rights to the forests of the Pacific Northwest. Paradoxically, federal laws “delayed the transfer of property rights and as a result actually encouraged the rapid cutting observed by the General Land Office in the 1870s and 1880s.
The lumber companies circumvented federal restrictions on the amount of land ownership by having their agents buy separate land parcels only to transfer them to the lumber companies. However, the estimated costs for evading the restrictive law were excessive since federal policy had significantly driven up the transaction costs of land sales.