Agriculture Reference
In-Depth Information
Farmland Contracts during the Bonanza Era
Our discussion of the common law generated two predictions about the influence of com-
mon law default rules on the simplicity of contracts. The general idea—encompassed by
predictions 3.1c and 3.2c—is that a well-developed common law will provide contracting
parties with default rules that will reduce the need for complex agreements. We were unable
to test these predictions because the cross-section data did not allow us to distinguish among
various levels of common law development. The following discussion of farmland contract
during a historical period in which the common law was ill-developed allows us an indirect
test of these predictions.
In the late 1800s and early 1900s, large “Bonanza” farms arose on the plains bordering
Minnesota and North Dakota. These farms ranged in size from 5,000 to 50,000 acres but
ultimately were succeeded by smaller family farms. 23 In the beginning, these farms did not
lease out land but were operated by hired labor. It soon became clear that the large size of
the Bonanza farms limited their productive efficiency and the owners began to lease out
the land in relatively small plots (for example, 100-200 acres). In sharp contrast to the
simple (annual and oral) contracts that dominate modern farmland leases, these leases were
remarkably detailed and always seem to have been written. 24 These contracts were several
single-spaced typed pages detailing the often complicated terms of payment; the method,
depth, and time of plowing; the amount of fallow land; and the time and type of seeding. For
example, a 1894 contract between D. D. Dutton and the Amenia and Sharon Land Company
specified, among other things, that
a tract not to exceed One Hundred and Twenty-Five (125) acres in area may be left unplowed to be
summer fallowed during the season of 1895; also to plow before June 1st, 1894 all land now unplowed
on said premises and to seed same to millet immediately after plowing, and to again plow said land
seeded to millet after July 25th and before August 15th, 1894, said second plowing to be done at least
Five (5) inches deep and all weeds and millet to be thoroughly turned under and entirely covered. 25
There is a striking difference between this contract and the terse contract from 1982, also
from North Dakota, shown in figure 3.1.
Why were these frontier-era contracts so complicated compared with the simple contracts
that prevail today? The best answer—and one that is consistent with predictions 3.1c and
3.2c—seems to be that, in this young state, the common law was simply undeveloped,
settlements were still being established, and a stable community did not yet exist. 26 There
were no common law default rules, so that contracting parties needed to specify, in detail,
the sort of things that would now simply fall under the category of good husbandry.
Also, because communities had not yet developed, market enforcement via reputation was
unlikely to have been important. The law, and reputations, take time to develop and until
Search WWH ::

Custom Search