PROPERTY

According to James Madison, property has two meanings. Sir William Blackstone (1723-1780) defined it as "that dominion which one man claims and exercises over the external things of the world, in exclusion of every other individual." Land, merchandise, or money might thus be called one's "property." But Madison rejected that narrow concept for the Republic and preferred "a larger and juster meaning" that "embraces every thing to which a man may attach a value and have a right; and which leaves to every one else a like advantage." Madison was referring to what we might classify as rights, such as the right to one's religious opinions and their exercise or to "the safety and liberty of his person." For that reason, the American Revolution had begun with calls to protect "Liberty and Property," and after more than a decade and a half of political experiment with republican government, Madison in 1792 was reiterating the guiding principle that "Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses." Liberty and property were inextricably connected, each necessary to the other, each an aspect of the other. Looking forward to the federal Republic newly established under the Constitution, he set the standard for evaluating the fulfillment of the Revolution: "If the United States mean to obtain or deserve the full praise due to wise and just governments, they will equally respect the rights of property, and the property in rights."

the founders and property rights

The founders of the Republic were drawing on a long tradition in which property guaranteed personal independence and enabled an engaged citizenry to resist the encroachment of arbitrary government power. John Adams and others were fond of quoting Englishman James Harrington (1611–1677), who in the preceding century had written "Power always follows Property, and if the Republic was to survive, private property must be secured as a counterweight to the power of the state." Events in the newly independent states under the Articles of Confederation, however, had called that capacity into question, despite efforts to guarantee property rights. Several state constitutions had declared property a natural right or had declared that no one could be "deprived of his life, liberty, or property but by the law of the land." The new state courts largely continued to follow the common law, accepting the orthodox principle as delineated by Blackstone: "So great … is the regard of the law for private property, that it will not authorize the least violation of it." Nevertheless, legislative responses to military necessity and postwar economic difficulties forced legislatures to confiscate estates and to adopt policies that had the practical effect of taking property. They issued unsecured paper money and made it legal tender for the payment of debts regardless of its depreciated value, or stayed judicial execution of debt judgments. In the minds of many, such acts were tantamount to confiscation of property contrary to the purposes of government and threatening to the cause of liberty. "Property must be secured," warned John Adams (1735–1826), "or liberty cannot exist."

The Federal Constitution. The framers of the Constitution, therefore, had property rights in mind among their many concerns when they met in Philadelphia in 1787. In urging its ratification, the authors of The Federalist (1787–1788) referred to "property" no less than sixty-four times, concluding with Alexander Hamilton's praise in Federalist No. 85 of proposed constitutional "precautions against the repetition of those practices on the part of the State governments, which have undermined the foundations of property and credit." Although the Constitution itself did not use the word "property" except in reference to federal property, it contained numerous indirect protections for private property. It barred the federal government from ending the slave trade for twenty years, gave federal protection to the recapture of fugitive slaves, and denied it the power to enact export duties or bills of attainder. More extensive were its limitations on the states: addressing two of the most worrisome threats to property by the states under the Articles, the Constitution denied states the authority to issue bills of credit or impair the obligations of contract.

Even so, reluctant ratifiers demanded a written bill of rights to make explicit protections of liberty and property. Madison responded to the suggestions of the state ratifying conventions with a list of prefatory statements, including the declaration "that government is instituted, and ought to be exercised for the benefit of the people; which consists in the enjoyment of life and liberty, with the right of acquiring and using property, and generally of pursuing and obtaining happiness and safety." Congress rejected such statements, but in what became the Fifth Amendment, it declared, "No person shall … be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation."

Property's social utility. No state convention had requested a "just compensation" clause, though many states had such provisions of their own or followed the lead of the federal Constitution by enacting them in a second wave of state constitution writing. A long common law tradition, as well as the lessons of colonial experience, had demonstrated the importance of private property as the guarantor of individual freedom and the foundation of society. The sanctity of private property, that is, rested as much on its social, or public, utility as on its personal nature. Legal guarantees of the security of private property, according to the standard formulation of the time, were a socially granted right resting on a compact of the people with each other for their collective good. Throughout the colonial period, therefore, assemblies had acted in the public interest by placing limits on land speculation, on interest rates, and on the price of necessities, just as they had granted incentives to encourage the development of necessary public services. They had exercised the common law power of eminent domain for public needs, though always confined by the obligation to provide just compensation to affected owners. Vermont expressed this doctrine in 1786 when it included in its Declaration of Rights the inarguable statement "that private property ought to be subservient to public uses, when necessity requires it; nevertheless, whenever any particular man's property is taken for the use of the public, the owner ought to receive an equivalent in money."

redefining property rights

The Revolution placed new and ultimately unbearable demands on traditional concepts such as the "public good" and on the balance between public purpose and private gain. James Wilson, lecturing on property at the new College of Philadelphia while serving as associate justice of the U.S. Supreme Court, expressed traditional doctrine when he explained, "Property, highly deserving security, is, however, not an end, but a means. How miserable, and how contemptible is that man, who inverts the order of nature and makes his property, not a means, but an end!" Post-Revolutionary economic and jurisprudential thought, however, was calling into question the ability—or authority—of the state to decide whether gain from a particular use of property was an end in itself or a means to social progress. The founders had drawn their ideas of private property rights from political theory, religion, and morals, but these ideas were gradually replaced by looking at their historical origins and their general social utility.

The impulse to growth and development thus challenged ideas of property rights. Though not as complete a break as the abandonment of state involvement in religion, the state abandonment of mercantilism meant a retreat from government's former level of involvement in economic matters ranging from freedom of contract to concepts of liability. And just as religious activity exploded, so, too, did economic enterprise. The progress of the new republican society remained the goal and purpose of government and law, but its pursuit was increasingly devolving on individuals and the private sector. In the interests of national progress and the public interest, a new instrumental conception of property would change traditional notions of property rights, ranging from concepts of quiet title, vested rights, and even just compensation.

"Public interest": A broadening concept. What was "in the public interest," however? What was a "public use" and what test might apply to determine the proper instrumental achievement of that goal? Popular sovereignty broadened the concept of "public use" to embrace economic "improvement" and granted to private individuals authority once jealously guarded by the state. Eminent domain had once been the exclusive power of the sovereign state, but the sovereign people, acting through their elected representatives, began to grant such power to private individuals acting, presumably, in the public interest. Legislatures did not bow to all demands, and patterns of favoritism toward special interests are difficult to demonstrate. Nevertheless, in the transition from an agricultural economy to one with a vigorous commercial and manufacturing sector, development through eminent domain necessarily took place at the expense of farmers and established economic interests. If, therefore, a private enterprise increased national wealth, it arguably served the public interest and legislatures allowed private takers to do what only the state had had the authority to do—that is, to take private property, allowing for just compensation. But what was "just compensation"? This, too, was difficult of solution, and many owners of farms felt aggrieved by the methods and principles used to calculate such value by private takers.

The impact of eminent domain on quiet title to property thus epitomized the emerging principle that private gain served the public welfare, but it was only one of many legal changes that challenged traditional ideas about property rights. The creation of the modern business corporation paralleled that development. Once a feature of municipal governance or mercantilist statism by virtue of performing a service for the state, the corporation quickly evolved in the early national period. Constitutional guarantees of the sanctity of contract, initially conceived as protecting contractual obligations between private parties, were extended to corporate grants by states to private individuals or groups. This principle was articulated most famously in the U.S. Supreme Court's decision in Dartmouth College v. Woodward (1819), which protected legislative grants of incorporation against revocation by a subsequent legislature unless express provision for rescinding them had been made. No such single case advanced the next vital principle, that of limited liability, but by the first quarter of the nineteenth century, courts were protecting the property rights of investors by shielding them from the traditional remedies of creditors against their personal assets. Investors also benefited from the enactment of state bankruptcy laws. Though two attempts at a federal bankruptcy law failed in this period (statutes of 1800 and 1841 were quickly repealed), the Supreme Court helped define the scope of state laws that overcame traditional suspicions and moral disapproval of business failure. Though bitterly contested, such laws obtained the necessary sanction of public approval as conducive to the general progress of society.

One person's enjoyment of greater choice and security of property, of course, might mean another's diminished enjoyment. Although Supreme Court decisions upholding the sanctity of contract supported the principle of vested property rights, the interests of economic advancement worked against them. In the case of Charles River Bridge v. Warren Bridge (1837), vested rights were forced to yield to expansion and "improvement." According to the majority opinion of Chief Justice Roger Taney, some property rights had to be sacrificed to others if the new nation was to join the ranks of world powers. The law, he wrote, must sometimes intervene on the side of progress and enable states "to partake of the benefit of those improvements which are now adding to the wealth and prosperity, and the convenience and comfort of every other part of the civilized world." Dissenters might assail such decisions as infringements of existing property rights and principles of moral obligation, but the meaning of property itself had changed and its purpose would be subject to the play of politics.

See alsoAnti-Federalists; Bankruptcy Law; Bill of Rights; Constitutional Convention; Corporations; Dartmouth College v. Woodward; Debt and Bankruptcy; Founding Fathers; Politics: Political Thought .

bibliography

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Ely, James W., Jr. The Guardian of Every Other Right: A Constitutional History of Property Rights. 2nd ed. New York: Oxford University Press, 1998.

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David Konig