Institutional Land Investment
Having a nation of yeoman was a particularly important part of maintaining a free Republic according to Thomas Jefferson. He noted that, “the small landholders are the most precious part of a state.” With this sentiment, I must agree. And, I would contend, that the Jeffersonian take is indeed the American Conservative take.
President Donald Trump has jumped on the bandwagon of the 50-year-mortgage. This is a terrible idea. The first and most apparent reason for understanding this as a bad idea is that California has already implemented it. The United States, as a whole, is suffering from crippling housing costs, California is the State with the worst presentation of this illness by far. Whatever monetary piolicy dealing in housing presented by California should be avoided if merit and outcomes are your guiding light.
The second, and more important, reason for avoiding a 50-year-mortgage is that Thomas Jefferson would have waged war against you for such a move. We have an unemployment issue in this nation, and we have a welfare reliance issue in this nation. We also have institutional ownership of unused lands. Jefferson viewed land ownership as a natural right.
“Wherever in any country there are idle lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right.” - President Thomas Jefferson
Jefferson advocated for the division and selling of public lands to individual landowners rather than to larger land prospectors and corporations. He fought for smaller parcel sizes in the Land Ordinance of 1785, but the passed legislation held parcel size at 640 acres presumably for managerial and surveying considerations.
Having fought a war against the ostentatious British royalty and aristocracy, Jefferson had particular disdain for those holding significant wealth being involved in challenges to governmental strength. This is a display of his devotion to the Republican form of government limited by a Constitution.
“I hope we shall crush in [its] birth the aristocracy of our monied corporations which dare already to challenge our government to a trial of strength, and bid defiance to the laws of our country.”
At this time, institutional investors own an estimated 3% of the single family homes in the United States - due to pricing pressures many are being held empty awaiting a buyer. This is happening while individuals and families sit around collecting food stamps. Idle lands and unemployed welfare recipients are not a great combination. Black Rock and Vanguard are in the housing and REIT market. Black Rock owns Invitation Homes and Vanguard provides one of the larhest REITs ($VNQ) for access to this market through the market. Berkshire Hathaway is so involved that we see rental signs peppered throughout the nation bearing their name and logo.
When the Constitution was ratified in 1788, it rendered many of the prior Confederate laws inoperable. A new land law was required to sell public lands. Hamilton - employed as Secretary of the Treasury at that time - wanted to sell the lands for top dollar in unlimited quantities to the extremely wealthy. Pennsylvania Congressman Gallatin argued that small farmers and individual landowners be accommodated as well. A compromise between the two views was struck by Congress in the Land Law of 1796. The law allowed lands to be purchased for $2 per acre in unlimited quantities, and the fees would not be due for a year. This allowed the wealthy to purchase large tracts of land, while the less wealthy could purchase smaller tracts without needing to pay up front.
Jeffersonian and Hamiltonian viewpoints are still in conflict to this very date.
Where others wanted to make way for prospectors and speculators, Jefferson wanted to ensure land ownership of actual settlers. This is an extension of self-government. Jefferson, further, was wary of both unending property taxes and financial instruments backed by property. He viewed such levies as elders being unnecessarily burdensome upon future generations. Jefferson himself knew the effect of these instruments. Jefferson’s father-in-law accumulated massive debts. When he passed, a decision was made to divide the estate between Jefferson and his brothers-in-law, as such the responsibility for those debts passed with the properties onto the younger men thus encumbering them and their estates. Jefferson was on paper one of the wealthiest men in Virginia, but he was made poor by these debts. For this and other reasons Jefferson is quoted as stating, “The Earth belongs to the living.”
The longer the financial instrument, the worse the problem. Mortgages burden one’s heirs with one’s decisions thus creating a sort of serf class through financial instruments. Taxes are of the same effect: the decisions of a past Congress burden today’s landowners with unending payments to a master where a failure to pay the tax results in the forfeiture of the land. Forfeiture of land is a chief and well-understood cause for war. This is obvious, as self-governance is almost wholly predicated upon land ownership. Jefferson urged that we remove the ability to contract multi-generational financial burdens as “it would bridle the spirit of war”.
Jefferson always privileged self-government over the desires and passions of institutions. This is the American Conservative way and it should be preserved and protected by whoever claims himself an American Conservative.
Definitions
Yeoman - a person who owns and cultivates a small farm; from the English commonlaw class of freeman below the Gentry.
Reading
https://founders.archives.gov/documents/Jefferson/01-06-02-0420-0001
https://www.nps.gov/parkhistory/online_books/blm/history/chap1.htm
https://fee.org/articles/principle-interest-thomas-jefferson-and-the-problem-of-debt/