Article on homesteading

Dear Everybody,

For some time, I have been wondering about one major issuse that very few
people have bother to consider when disccussing space colonzation: private
property. Private property is the key to capitialism and to any future
success in colonization because with private property, people who owns have a
desire to conserve and to exploit their resources more effectively and
rationally in order to increase their value. So far, most of the discussions
on colonization seem to be based on a couple of assumptions.

A) socialitic in which nobody have private property in exchange for
just the thrill of working in space. I consider that thrill to be
very short-lived because sooner or later they will be working a lot
and starting to wonder where was that sense of freedom have
disappeared to.

Or B) Some kind of private property will magically appeared thank to
the far- sighted government (unnamed) who will set everything up
for them. Just set right up and sign your name there, yessir! Y
ea, right. Governments are in business of control and power,
not liberty which is after all based on centuries- old story of conquest
and murder and theiving. Thomas Jefferson's Declaration of
Independance and the Consititution, based on natural law prior to 1861 were
one of the all too rare exceptions to this ugly rule.

I believe that I may have found one of the answers to the proble of creating
and protecting private property in space in a article dealing with the Third
World and 19th century America. This article deal with squatter's rights and
homesteading. It show how people deal with the need for claiming property
property out of vast wilderness and how they protect their rights. Even if
the lesson don't apply in every sense of word to the problem of space
colonization, we can come away with a new sense of what work needed to be
done to make our colonization successful!

Carl Mullin
www.ravenartstudio.com

REASON * May 2001
Citadels of Dead Capital
(http://reason.com/0105/fe.hs.citadels.shtml)
What the Third World must learn from U.S. history
By Hernando de Soto

Throughout the Third World and the formerly communist countries,
neighborhoods buzz with hard work and ingenuity. Streetside cottage
industries have sprung up everywhere, manufacturing anything from footwear to
imitation Cartier watches. There are workshops that build and rebuild
machinery, cars, even buses. In many countries, unauthorized buses, jitneys,
and taxis account for most public transportation. Often, vendors from the
shantytowns supply most of the food available in the market, from carts on
the street or from stalls in buildings they built themselves. The new urban
poor have created entire industries and neighborhoods that have to operate on
clandestine connections to electricity and water.

Such "extralegality" is often perceived as a "marginal" issue. In fact, it is
legality that is marginal; extralegality has become the norm. When
international agencies jet their consultants to the gleaming glass towers of
the elegant quadrants of town to meet with the local "private sector,"
theyre talking to only a fraction of the entrepreneurial world. The emerging
economic powers of the developing world are the garbage collectors, the
appliance manufacturers, and the illegal construction companies in the
streets far below.

In spite of their obvious poverty, even those who live under the most grossly
unequal regimes possess far more than anybody has ever understood. These
possessions, however, are not represented in such a way as to produce
additional value. When you step out the door of the Nile Hilton, what you are
leaving behind is not the high-technology world of fax machines, ice makers,
television, and antibiotics. The people of Cairo have access to all those
things. What you are really leaving behind is the world of legally
enforceable transactions on property rights. In Cairo and similar cities,
mortgages and accountable addresses are unavailable even to people who would
probably strike you as quite rich.

Outside Cairo, some of the poorest of the poor live in a district of old
tombs, called the City of the Dead. But almost all of Cairo is a city of the
dead -- of dead capital, of assets that cannot be used to their fullest. The
institutions that give life to capital -- that allow one to secure the
interests of third parties with work and assets -- do not exist here.

To understand how this is possible, one must look to 19th-century America.
The United States inherited from Britain not only its fantastically complex
land law but also a mess of overlapping land grants. The same acre might
belong to one man who had received it as part of a vast land grant from the
British Crown, to another who claimed to have bought it from an Indian tribe,
and to a third who had accepted it in place of salary from a state
legislature -- and none of the three might ever have actually laid eyes on
it. Meanwhile, the country was filling up with immigrants, who settled
boundaries, ploughed fields, built homes, transferred land, and established
credit long before governments conferred on them any right to engage in these
acts.

Those pioneers believed that if they occupied land and improved it with
houses and farms, it was theirs. State and federal governments believed
otherwise, and sent troops to burn farms and destroy buildings. When the
soldiers left, the settlers rebuilt and returned to scratching out a living.
That past is the Third Worlds present.

English Unsettlement
Initially, colonists in British North America attempted to apply the
doctrines of English property law. But most colonists comprehended few of the
technicalities of English law; many did not know or care to know the
differences between legal writs, law, and equity, or other subtleties. More
importantly, the common law of property was often ill-suited to deal with the
problems that confronted the colonists. A superabundance of land presented
the first settlers with opportunities unimaginable in the Europe they had
left. Not all of this land was fertile, well-drained, or within easy reach of
meadows to supply hay for the settlers cattle and horses. In their search
for suitable land, the colonists often moved at whim, laying out boundaries,
cultivating fields, building houses -- and then abandoning it all to move on
to more fertile territory.

The result for property rights was a great deal of variability and
extralegality. In England, occupying a plot of land for a long period without
a title -- "squatting" -- was against the law. In America, squatting on
available land quickly became a common practice. According to Amelia Fords
study of the colonial precedents of the U.S. land system, "Before the arrival
of the Massachusetts Bay Company in New England, there were settlers without
charter or grant living at various places within the limits of the Bay....The
first Connecticut settlers were legally trespassers on their territory and
could base their rights only in occupation and purchase from the Indians."
During Marylands early years, Frenchmen and other non-English people resided
on land that they were incapable of owning under the conditions of the grant.
And in 1727, Pennsylvania legislators protested those who "sitt frequently
down on any spott of vacant Land they can find." These colonial American
squatters had already occupied and improved 100,000 acres of land without
legal permission.

There were no effective legal means to reconcile many of the conflicts that
arose. As a result, squatters turned to de facto devices that created
openings for legitimizing squatting. One of the most intense conflicts took
place on the largely vacant outlying territory now known as Vermont.

Prior to the American Revolution, both New York and New Hampshire claimed the
territory of Vermont. In order to circumvent New Yorks claim, Gov. Benning
Wentworth of New Hampshire, "acting on the principle that possession was nine
tenths of the law...made free grants in the region to both New Hampshire and
Massachusetts citizens," notes author Aaron Morton Sokolski. Following
closely on their heels, squatters with little allegiance to any state soon
overran the territory. Although both colonies attempted to thwart the
squatters claims by repeatedly bringing ejectment proceedings against them,
squatter dominance of the territory was so complete that Ethan Allen and his
"squatter followers" won independence and then statehood for Vermont
following the Revolution. A primary result of this extraordinary triumph of
squatter power was formal recognition of their property arrangements.

Squatting was often fueled by propertied politicians eager to develop and
exploit a colonys resources. In most colonies, politicians believed that
territorial development could be accomplished only through immigration. To
accomplish this goal, colonial politicians gave grants to individuals and
groups to settle on undeveloped land, predicating their title on occupation
and improvement. In Virginia, according to Ford, "to seat the tract meant to
build a house, plant one acre, and keep stock for one year; if this were not
done within three years, the land lapsed to the state." Under Massachusetts
law, a settlers duties "included taking actual possession and within three
years, building a house of a certain size, usually eighteen or twenty feet
square, and clearing five to eight acres for mowing and tilling."

In securing the rights they hoped to achieve through such settlement
policies, squatters often found the formal system too burdensome or complex.
In the chaos surrounding law, land, and property, the migrants realized that
if they were going to live in peace among themselves, they had to establish
some sort of order, even if it had to be outside the official law. Squatters
began inventing their own species of extralegal property titles known as
"tomahawk rights," "cabin rights," and "corn rights."

Tomahawk rights were secured by deadening a few trees near the head of a
spring and marking the bark of one or more trees with the initials of the
person who made the improvement. Cabin rights and corn rights meant staking
out land by building a log cabin or raising a crop of corn. Significantly,
these extralegal rights were bought, sold, and transferred -- just like
official titles. And although such cabin or corn rights may not have legally
entitled anyone to the land, there is no question that they helped avoid
quarrels, were widely accepted in Americas frontier communities, and became
the source of legal title years later.

Free Associations
Often geographically isolated from the political and constitutional debates
over property, many squatters did everything they could to secure the land
they occupied. Some even paid twice for the same parcel, while others paid
lawyers enormous fees to help them make their land legal. Many did not have
the means to cover the costs of the official legal system, so they
established their own extralegal arrangements, thus creating new avenues for
accessing and holding property on the American frontier. For all practical
purposes, they took the law into their own hands -- and forced the legal
establishment to follow their lead. It took the politicians some time before
they awakened to the fact that alongside the official law, extralegal social
contracts for property had taken shape, and that they constituted an
essential part of the nations property rights system. To establish a
comprehensive legal system that could be enforced throughout the nation, they
would have to catch up with the way people were defining, using, and
distributing property rights.

Consider the claim associations that proliferated throughout the Midwest
during the first half of the 19th century. These were originally formed by
settlers to protect their rights against speculators or claim jumpers. Two
claim clubs in Iowa, for example, agreed in their constitutions to protect
each members claims for a period of two years after the land sales. One Iowa
historian noted that "when an actual settler -- one who wanted land for a
home and immediate occupancy ...settled on a portion of [an associations]
domain, he was immediately set upon by the bloodhounds, and it was demanded
of him that he either abandon the claim or pay them for what they maintained
was their right." If "the settler expressed doubt to their having previously
claimed their site, the [claim association] always had one or more witnesses
at hand to testify to the validity of the interest they asserted."

These associations provided their own strict and primitive justice. A local
minister once asked an association member what would happen if a claim jumper
succeeded in buying his claims. The squatter replied, "Why, Ill kill him;
and, by agreement of the settlers, I am to be protected, and if tried, no
settler dare, if on the jury, find a verdict against me." More typically,
however, claim associations provided at least the illusion of due process, by
convening juries of fellow squatters to sit in on cases of claim jumpers. In
one Iowa county, a claim jumper who attempted to occupy a vacant second tract
owned by a member of a claim association was "within an hour" brought by "a
score of earnest, angry men" before a settler jury.

Each claim association drafted its own constitution and bylaws, elected
operating officers, established rules for adjudicating disputes, and
established a procedure for the registration and protection of claims. Their
function also extended into the official law. One associations constitution
candidly describes its mission: "Whereas, we have, by the sanction of the
Government become settlers on its lands, and have expended out time and money
in improving them, we feel justly entitled to buy them at the regular price.
And whereas there may be persons disposed to interfere with our rights, and
thus create distrust, excitement, and alarm; Therefore it is Resolved, that
in our case there is safety, only in Union -- and a determination to settle
amicably any disputes amongst us, to reciprocate concessions, and avoid every
thing, that may have a tendency to create distrust and excitement -- to abide
explicitly by the wards of the several committees, and defend them in the
discharge of the duties assigned to them." The document bears striking
resemblance to the settlement contracts that squatters make throughout the
Third World today.

Although members of claim associations denounced large speculators, they
themselves were, as one historian points out, "small-scale speculators." The
claim associations of American history were more than just a scheme to
protect the homestead; they were also used to protect the trade in claims.

And thus claim associations helped create a new body of laws. The settlers,
however, did not displace official law completely. Their extralegal
arrangements served as temporary rest stops on the road to legal
respectability.

Rules on the Ground
Despite the implicit acquiescence of local politicians to such arrangements,
squatters still encountered a hostile world. Many constantly provoked
conflict with Native Americans by invading their lands. But squatters were
also a threat to the elite, who feared losing their vast properties. One
member of that elite -- George Washington -- complained in 1783 of the
"Banditti who will bidd defiance to all Authority while they are skimming and
disposing of the Cream of the Country at the expense of many." But when he
tried to eject the people who had squatted on his Virginia farmland, his
lawyer warned that, in Fords words, "If he succeeded in his suit against the
settlers on his estate, they would probably burn his barns and fences."

Relations between states and squatters also began to heat up. Even before the
Revolution, migrants from Massachusetts had already begun to settle in Maine,
a territory Massachusetts had claimed as early as 1691. After the Revolution,
with its treasury bankrupt and its currency depreciated, Massachusetts
started seeing the vast lands of Maine as a major source of new revenue --
and the squatters as an obstacle to the sale of large blocks of land. In
1786, the governor issued a proclamation prohibiting squatting in Maine.

To reassure potential purchasers, Massachusetts appointed a committee to
investigate and demand payment from illegal "trespassers." Most squatters,
however, simply refused to move or to pay for their lands. Rather than
compromise, the state ordered sheriffs to enforce legal eviction procedures,
igniting a virtual war. When a sheriff was killed trying to oust a squatter,
juries refused to convict the alleged murderer. Massachusetts eventually
withdrew from the fight, and Maine became a state in 1820.

Other colonies did their best to suppress squatting. In Pennsylvania,
Scots-Irish settlers began moving into Indian lands as early as 1730, and the
Native Americans fought back. From 1763 to 1768 the Pennsylvania Assembly
tried to deter squatting by threatening the death penalty, while Gov. William
Penn ordered soldiers to remove illegal settlers. Despite these measures, the
number of squatters doubled. In response, writes economic historian Stanley
Lebergott, "the infuriated governor then proclaimed that those settling on
Indian lands would be executed. But no judges could be found for such
prisoners, or compliant juries and secure lockups."

In a country where every settler was either a migrant or related to one, some
colonial authorities were bound to realize how difficult it would be to apply
English common law to many new settlements. Under English law, even if
someone squatted mistakenly on another persons land and made improvements,
he could not recover the value of what he had done. In the colonies, however,
given the lack of effective government and reliable records and surveys,
authorities had to accept that improvements made on land, taxes paid, and
local arrangements among neighbors were also acceptable sources of property
rights. As early as 1642, the colony of Virginia allowed a wrongful possessor
to recover the value of any improvements from the true owner. Moreover, if
the rightful owner was unwilling to reimburse the squatter for these
improvements, the squatter could purchase the land at a price set by a local
jury. This statute was soon copied by other colonies.
This legal innovation of allowing a settler to buy the land he had improved
before it was offered for public sale was known as "preemption" -- a
principle that would be the key to the integration of extralegal property
arrangements in American law over the next 200 years. Politicians and jurists
began to interpret "improvement" in ways that heavily benefited squatters. In
North Carolina and Virginia, cabin rights or corn rights counted as
improvements. In Massachusetts, tomahawk rights were included. By the
Revolution, the corn rights of the itinerant squatter had been transformed,
in many peoples minds, into the occupancy rights of the hardy pioneer. Even
as George Washington was lamenting the "banditti" who had invaded his land,
elsewhere in Virginia politicians were protecting squatters extralegal
titles. (For states with little money, preemption was also a source of
revenue. They would charge squatters for surveying the land they had improved
and for issuing legal title.)

Digging In
Having won many battles, the squatters were still far from winning the war.
In 1785, Congress passed a resolution explicitly prohibiting squatting in the
public domain and giving the secretary of war authority to remove unlawful
settlers from federal lands in the Northwest Territory. This policy went into
effect in the spring of 1785 at the juncture of the Muskingum and Ohio
rivers, where the Army destroyed 10 families homes and built a fort to
prevent them from returning. Four years later, President Washington ordered
the removal of families who had settled on Pennsylvania frontier land owned
by Native Americans.

In the two decades after the Constitution was adopted, Congress steadfastly
held to its antagonism toward settlers residing illegally on the public
domain. In 1796, it raised the minimum price for public lands from the $1 per
acre set in the Land Ordinance of 1785 to $2 per acre. In 1807, Congress
passed a measure that provided for fines and imprisonment for any squatter
who failed to comply with the law once notified, and authorized force to
remove illegal settlers if necessary. An 1812 document of the House Committee
on Public Lands noted, "Promiscuous and unauthorized settlement on public
lands are in many respects, injurious to the public interest."

But Congress didnt understand the sheer dimension of the pressure from
squatters. Nor did it have the means to impose its mandates. Even the General
Land Office, established in 1812 to survey, sell, and register the public
lands, could not do its job. Charged with confirming land patents sent in
from the district offices, the new federal agency also had to oversee the
record keeping of purchases made on credit. All these tasks soon overwhelmed
its small staff, which quickly fell behind in most of their duties.

In addition, the young nation had limited financial resources and often
resorted to land grants to compensate certain sectors of the population. From
1780 to 1848, Congress provided 2 million acres of land for the soldiers who
fought in the Revolution, 5 million to veterans of the War of 1812, and 13
million for those who fought in the Mexican-American War. Between 1851 and
1860, Congress added another 44 million acres for those who had performed
military service. By the mid-19th century, a thriving black market in land
scrip emerged, fueling both squatting and speculation. For every 100 soldiers
who received land scrip, 84 sold their rights in the black market.

The federal government also gave 318 million acres -- almost one-fifth of all
federal lands -- to the new railroads crisscrossing the continent. Although
much of the land was of little economic value, a sizeable portion did contain
minerals or was arable. The lions share went to the transcontinental
railroads, which received only every other section of land along their
routes, creating a checkerboard pattern of alternating government and
railroad land. Congress believed that the railroads would sell the land they
didnt need quickly and cheaply to encourage settlement. Yet once again, the
realities of land settlement conflicted with the hopes of politicians. The
checkerboard arrangement, according to historian Richard White, had "delayed
settlement on millions of acres of the best lands and had closed them to
acquisition." In certain cases it even led to open warfare between the
railroad companies and settlers.

One conflict arose in 1880, in Californias southern Joaquin Valley, then
called Mussel Slough, when farmers and ranchers establishing themselves on
railroad properties could not come to a sales agreement with the rail
companies. This eventually led to a shootout in which five settlers died; the
responsible marshal admitted he was "not certain who fired first."
Editorializing on the incident, the San Francisco Chronicle condemned the
railroads: "Whatever might be their strictly legal rights, it is undeniable
that all the equities were in favor of the settlers." In any case, physical
force was also on the side of the settlers: Officials estimated that
dislodging them would require between 200 and 1,000 good soldiers. The
governments efforts to construct an orderly land system could not overcome
the will of the common people to assert their right to the national domain.

The turning point came in Kentucky, where the property system, as in many
states, was in complete disarray. (The new states land claims added up to
three times its area.) In 1821, the Supreme Court declared Kentuckys
occupancy law -- which recognized a right to land based on improvements made
on it -- unconstitutional. The case involved the heirs of John Green, who was
a large landowner, and Richard Biddle, who had settled on Greens land
illegally. The decision explicitly favored only those people who held legal
title to the land they occupied. According to the court, the Kentucky law
"operated unjustly and oppressively because the lawful owner is compelled to
pay, not merely for the actual ameliorations in the land, not its increased
value only, but the expense incurred by the occupant in making pretended
improvements, whether they are merely useful or fanciful, and matter of taste
or ornaments only dictated by his whim and caprice." After rehearing Green v.
Biddle, the court reaffirmed its previous decision in 1823, emphasizing that
the occupancy laws deprived "the rightful owner of the land, of the rents and
profits received by the occupants."

Politicians who had been cultivating the support of their extralegal
constituents lambasted Biddle as "most ruinous" and causing "great alarm" for
Kentuckians. The Supreme Court might be oblivious to the new political and
legal reality taking shape on the rapidly expanding frontier, but Western
politicians only had to look out their windows to see how quickly the country
was changing. Tens of thousands of hardy migrants had trudged westward from
the original colonies over the Appalachians to settle on fertile, virgin
lands. In 1620, there had been approximately 5,000 settlers in all of British
North America. By 1860, the U.S. population was more than 30 million and
counting. Fifty percent of that citizenry lived west of the Appalachians.

In the minds of many politicians and newspaper editors, the villain was now
the Supreme Court. One local paper spoke of the "treacherous conduct" of
justices who threatened to "exterminate" the rights of "nonresidents and
aliens." In the midst of the furor over the courts authority, Kentuckys
powerful Sen. Richard M. Johnson declared that the decision would lead "to m
uch litigation where questions had been settled for years, and put
everything respecting landed property into the greatest confusion."
Kentuckys other senator -- the even more influential Henry Clay, who
generally opposed liberally extending squatter rights -- conceded the point:
"They build houses, plant orchards, enclose fields, cultivate the earth, and
rear up families around them....In this way, thousands and tens of thousands
are daily improving their circumstances and bettering their conditions." Both
the governor and the state legislature joined the chorus.

In an extraordinary turn of events, even Kentuckys courts rejected the
decision. In a similar case two years later, a Kentucky judge noted that
Biddle could not be followed because the case "was decided by three only of
the seven judges that composed the Supreme Court of the United States; and
being the opinion of less than a majority of the judges cannot be considered
as having settled a constitutional principle." In 1827, another Kentucky
judge rejected Biddle, emphasizing that the occupying claimants law was
constitutional in "cases too numerous to be quoted."

In the middle of the dispute over Biddle, Andrew Jackson, a vocal supporter
of the pioneers, almost won the presidency. Four years later, he did become
president. During his two-term administration, sympathy for the rights of
squatters increased. So did public animosity toward judges and attorneys, who
were perceived as eager agents of the rich and the powerful. Between 1834 and
1856, Missouri, Alabama, Arkansas, Michigan, Iowa, Mississippi, Wisconsin,
Minnesota, Oregon, Kansas, and California all adopted occupancy laws similar
to the Kentucky law rejected in Green v. Biddle. Paul Gates writes, "No case
decided by the Supreme Court had been so completely overturned by state
legislation and state courts, by failure of the federal courts to make use of
the case, and finally by the unchallenged act of Congress extending the
coverage of federal courts to occupants."
By 1830, the 13 original states were 24, including seven in the West whose
representatives in Washington were fully committed to policies favoring the
squatters. To gain the support of this increasingly influential bloc,
Northern and Southern states competed to show how pro-Western they were.
Members of Congress began drafting legislation that helped ease the way for
settlers arrangements to be absorbed into the legal system. At its center
was preemption. In 1830, a coalition of Western and Southern congressmen
passed a general preemption act that applied "to every settler or occupant of
the public lands...who is now in possession, and cultivated any part thereof
in the year one thousand eight hundred and twenty-nine." A squatter could
claim 160 acres of land, including lands he had improved, for $1.25 per acre.
Payment was required before the land was set for public auction, and
transfers or sales of preemptive rights were strictly forbidden.

In 1832, 1838, and 1840, Congress renewed the General Preemption Act of 1830.
Each time it attempted to strengthen further the rights of the lowest
squatter, while trying to block some of the abuses of the preemption
principle. For instance, the 1832 act lowered the minimum amount of land a
squatter had to purchase from 160 acres to 40 acres. By 1841, the preemption
principle had become so firmly established that Congress enacted a general
prospective preemption bill. The 1841 act covered not only existing squatters
but "every person...who shall hereafter make a settlement on the public
lands." The settled land had to be surveyed, but even this provision was
eventually overturned.

Settled Issue
As the 19th century progressed, Congress continued to play catch-up,
absorbing extralegal arrangements in official statutes. The California Gold
Rush, for example, produced a rich system, organized from the bottom up, to
let miners stake their claims and adjudicate disputes with other
fortune-seekers. Legally, they were trespassers, since most of the land they
were prospecting had hundreds of competing interests: Mexican land grants,
absentee owners, rival settlers, and the absence of a federal law that could
be enforced. But most politicians came to support the miners claims, and the
courts proceeded to sanction their extralegal arrangements. In 1861, a
justice of the California Supreme Court commented on the legitimacy of the
miners extralegal arrangements in Gore v. McBreyer: "It is enough that the
miners agree -- whether in public meeting or after due notice -- upon their
local laws, and that these are recognized as the rules of the vicinage,
unless some fraud be shown, or some other like cause for rejecting the laws."

At the end of the 19th century, American politicians and judges had come a
long way in the area of property law -- and it was the squatters who led them
there. This was also true for housing: In 1862, when the celebrated Homestead
Act gave 160 free acres to any settler willing to live on the land for five
years and develop it, it was only sanctioning what settlers had already done
by themselves. "Between 1862 and 1890," writes Richard White, "the population
of the United States grew by 32 million people -- but only about 2 million of
them settled on the 372,649 farms claimed through the Homestead Act." By the
time Congress finally approved it, the settlers already had many legal
alternatives for gaining title to public lands.

The American experience is very much like what is going on today in the Third
World and the formerly communist countries: The official law has not been
able to keep up with popular initiative, and government has lost control.
Third Worlders are organized in modern-day claim clubs, and their governments
have begun to give them preemption rights.

Theyve done a lot else as well, not all of it consistent with the rest. In
August 1999, Bangladeshi authorities demolished 50,000 shanties in the
capital city of Dhaka. Where demolition is impossible, governments have built
schools and sidewalks for the squatters. At the same time, they have
supported microfinance programs to assist the sweatshops that are
transforming residential areas into industrial zones throughout the world.
They have improved the stalls of sidewalk vendors, removed hordes of drifters
from their city squares and planted flowers instead, and tightened
construction codes to prevent buildings from collapsing as they did in Turkey
during the 1999 earthquake. They have tried to force the independent jitneys
and shabby taxis that glut traffic to meet minimum safety standards; they are
cracking down on theft of water and electricity, and are trying to enforce
patents and copyrights. They have arrested, jailed, and executed gangsters
and drug traffickers. They have tightened security measures to control the
influence of extreme political sects among the uprooted multitudes.

What they have not done is craft a formal legal system that recognizes those
multitudes property rights and lets them create capital. In other words,
they have not learned the lessons of U.S. history. Until they do, theyll
remain citadels of dead capital.

Hernando de Soto is president of the Institute for Liberty and Democracy in
Lima, Peru, and the author of The Other Path. This article is adapted from
his new book, The Mystery of Capital: Why Capitalism Triumphs in the West and
Fails Everywhere Else (Perseus). Copyright (c)2000 by Hernando de Soto.
Reprinted by permission of Perseus Publishing. All rights reserved.