Razorbacks, Ticky Cows, and the Closing of the Georgia Open Range: The Dynamics of Institutional Change Uncovered
Creators: name: Kantor, Shawn Everett
Publisher: name: California Institute of Technology
Year: 1990
Subjects: Fences, Tenants, Election laws, Crops, Pastures, Agricultural land, Voting, Electoral districts, Workforce, Landowners

description: While a redistribution of property rights might enable society to capture potential efficiency gains, the inevitable distributional conflicts make the transformation far from automatic. As individuals who would be adversely affected by the change seek a priori contracts for compensation, those who anticipate net benefits must decide how much to pay, who should pay, and who should receive their payments. As free riding, strategic bargaining, or the expensive monitoring and enforcement of contracts ultimately block voluntary agreements, society becomes unable to adopt the new institutional structure that promised to increase social wealth. If distributional conflicts become so severe and threaten to prevent the implementation of an income-enhancing property rights arrangement, what type of mechanisms will evolve to work these conflicts out? When voluntary negotiations break down, the government is usually called in to implement publically what individuals could not accomplish in the private sector. How, therefore, does the political process influence the path of institutional and economic development? This paper explores the dynamics of institutional change in an attempt to explain better why the adoption of potentially productive institutions are delayed and why inefficient ones persist.
The paper provides a micro-analysis of the transformation from an open range to a closed range policy in postbellum Georgia. The traditional agricultural practice in Georgia from colonial times until after the Civil War allowed animals to roam the countryside freely and forced farmers to erect fences around their growing crops. All unfenced land, therefore, was considered common pasture that could be used by anyone. After the Civil War there was a concerted effort to eradicate the open range policy and to force all livestock owners to fence in their animals instead of forcing farmers to fence them out of the growing crops. According to estimates provided in the paper, switching to the closed range would have generated net benefits for specific regions for Georgia, but distributional conflicts, coupled with high transaction costs, made a voluntary agreement to close the range unattainable.
The empirical evidence shows that the Georgia legislature's role in facilitating the closing of the range was crucial. First, the legislature allowed countywide referenda on what became known as the fence question. Upon seeing that majority rule generally failed as a mechanism to facilitate the adoption of a relatively profitable institution, the legislative body manipulated the voting mechanism so as to guarantee compensation for a subset of the expected losers. By forcing the transfer of income from expected winners to expected losers, the state legislature was able to facilitate the adoption of the closed range policy that promoted more rapid agricultural development in postbellum Georgia.
description: I gratefully acknowledge financial support from the Alfred P. Sloan Foundation, the John Randolph Haynes and Dora Haynes Foundation, the Anna and James McDonnell Memorial Scholarship Fund, and the Division of the Humanities and Social Sciences at Caltech. Participants at the 1989 All-UC Economic History Conference and the 1990 Cliometrics Conference offered valuable comments. Lance Davis, Avner Greif, Morgan Kousser, John Ledyard, and Jean-Laurent Rosenthal have been particularly generous with the provision of comments and criticisms during my work on this paper. Naturally, I am to blame for any of the shortcomings herein. 

Published as Kantor, S.E., 1991. Razorbacks, ticky cows, and the closing of the Georgia open range: The dynamics of institutional change uncovered. The Journal of Economic History, 51(4), pp.861-886.
description: Submitted - sswp723.pdf