New Life for the Octopus: How Voting Rules Sustain the Power of California's Big Landowners

• Published date: 01 May 2016
• DOI: http://doi.org/10.1111/ajes.12152
• Author: Merrill Goodall,Mason Gaffney
• Date: 01 May 2016

New Life for the Octopus: How Voting Rules Sustain

the Power of California’s Big Landowners

By MASON GAFFNEY and MERRILL GOODALL*

ABSTRACT. The concentrated ownership of farmland has influenced rural

life in the state of California for more than a century. Reformers have

introduced measures to counteract that concentration, such as acreage

limits on farms receiving water from federally funded projects. Large

landowners have fought back with policies that have protected their ability

to amass and maintain their empires. In the first part of this article, Mason

Gaffney presents this historical background in broad outlines. In the

second part, Merrill Goodall explains an important policy that preserves the

power of entrenched interests: water districts that are governed by a board

elected by a voting system that allots one vote to each dollar of land value.

In these districts, a tiny handful of landowners is able to control a public

agency without opposition and without the need to persuade other voters.

Origins of Concentrated Landownership in

California

By MASON GAFFNEY

California became a state in 1850. Even before that, Spanish and Mexi-

can governance had created large landed estates. The Spanish had

transferred their hacienda system to the New World, and in 1846, the

Treaty of Guadalupe-Hidalgo let 800 Mexicans retain title to 8,000,000

acres of land after the United States took control of the territory. The

fruits of the old feudal system were adopted by the new sovereign, and

the results are still with us today. Tejon, Flint-Bixby, Irvine, Stearns, and

Hearst all operated large ranches on land that was acquired as Spanish

*Gaffney: Professor of economics at University of California, Riverside. email: m.

gaffney@dslextreme.com. Author of After the Crash: Designing a Depression-Free

Economy (2009) and The Corruption of Economics (1999). Goodall: Deceased 2002.

Goodall taught political science at Claremont Graduate University. Two of his areas of

research interest were water policy in California and public administration in Nepal.

American Journal of Economics and Sociology, Vol. 75, No. 3 (May, 2016).

DOI: 10.1111/ajes.12152

V

C2016 American Journal of Economics and Sociology, Inc.

land grants in the brief period of transition from Mexican to American

control (McWilliams 2000: 13–14).

Migrants coming to California or gold miners leaving the mountains

and searching for work on a farm learned by 1860 that the best farm-

land had already been preempted. Preempted, but not farmed. Only 1

million acres out of 40 million were being cultivated in 1863. The

remainder were being underutilized by the land barons who had

gained title earlier. By 1870, the railroads owned 20,000,000 acres of

California, granted by Congress as a method of paying for construction.

In theory, the railroads only owned alternating sections of land, check-

erboard style, but settlers who tried to farm in the other sections soon

learned that the shadow of the railroads was cast over all of the land

along their routes. The state government of California was fully com-

plicit in the misuse of private authority, in large part because officials

were elected with money from the land barons (McWilliams 2000: 12,

15–18).

Federal Water Policy in the 19

th

Century

The federal government was also not very helpful to the millions of

farmers who were looking for land in western states. For example, the

Department of Interior relinquished its riparian claims on upstream

waters in mountainous areas, but that merely strengthened the titles of

downstream users who had claims, of which the large landowners

were primary holders.

Various populist reform measures were adopted at the federal and

state level to limit the power of large landowners in California or in

other western states that depended on federal water. Congress adopted

the Preemption Act, Homestead Act, and Morrill Act with the view of

making more land available to settlers who would work the land. The

federal government recognized that settlers were necessary to solidify

territorial claims, particularly against foreign powers that might other-

wise encroach on U.S. territory. But despite that incentive, the U.S. Con-

gress, influenced by wealthy interests, consistently undermined

western settlement by creating loopholes that would permit agglomera-

tion of large landholdings. For example, under the Reclamation Act of

1902, farmowners were not supposed to receive subsidized water for

The American Journal of Economics and Sociology650

tracts of land exceeding 160 acres, but in fact, farms as large as 40,000

acres benefited through the use of loopholes (U.S. GAO 1972: 11).

The Great Landowners and Their Water

State law in California was originally designed to allocate water accord-

ing to need, with the idea being that landowners needed lots of water

for dryland irrigation. According to the ancient doctrine of appropria-

tive use (first in time, first in right), landowners had a claim on water to

the extent that they used it on their land. The right to water was based

on the size of a farm. There was no incentive to use water efficiently.

Quite the contrary. The appropriative doctrine encouraged wasteful

uses, such as growing alfalfa, rice, irrigated pasture, or other water-

intensive crops in a desert.

Another wasteful method of monopolizing water rights in the 19

th

century was through the use of riparian rights, which are proportional

to the acreage adjacent to a body of water, including all ofthe backlying

land if owned by the riparian. Riparian rights “go with the land” and do

not require any usage. Using riparian rights, Henry Miller (of Miller &

Lux) effectively preempted large quantities of water and denied the

farmers not abutting the San Joaquin River rights to irrigation water. His

amassed water rights there and elsewhere permitted him to build an

empire, owning 1.2million acres (Igler 2001: 4).

I have discussed in my previous writings (Gaffney 2009: Ch. 1) the

effectiveness of property taxes as a method of limiting large landhold-

ings. Miller and Lux were equally cognizant of that relationship. Igler

(2001: 70) summarizes how they handled the problem:

For a corporation that owned nearly half a million of acres of land by 1875,

property taxes were unquestionably a source of great anxiety. [As a result of

reforms], between 1870 and 1872, tax assessments on land in California

jumped from $227,538,127 to $636,378,114. This increase could have forced

large landowners to sell off property. But county residents elected the prop-

erty assessors. and given the largest landowners’ political clout at the local

level, assessors were often responsive to their will. ... [In Fresno County, an

associate of Miller & Lux informed them that] “it would undoubtedly be to

your advantage that John Stroud be elected for Assessor. He can be man-

aged.” ...[Through their network of c ontrols over water allocators in Fresno

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