New in PERC Reports: Barbed wire entrepreneurship

By Daniel K. Benjamin 

Joseph Glidden transformed the American Plains. In 1874, Glidden patented the first practical design for barbed wire. The invention dramatically reduced the costs of separating cattle from crops and thus the costs of enforcing property rights to land. Farmers and historians have long been aware of the qualitative importance of barbed wire, but recent research by Richard Hornbeck (2010) makes clear the pivotal role of the invention in the late 19th century settlement of the American Plains.

Cattle wander, and without effective fencing they are so destructive to neighboring crops that cattle and crops cannot coexist. The early colonies adopted legal codes that required farmers to fence out others’ livestock. Without a “lawful fence” a farmer could expect no compensation for damages done by wandering livestock. New states entering the Union continued this legal tradition.

As a practical matter, if farmers wished to protect their crops, fencing was a necessary—and substantial—investment. In 1872, the value of the fencing capital stock in the United States was roughly equal to the value of all livestock. Equivalently, the value of the fencing stock was as great as the national debt or the value of all railroads in the United States. In fact, annual fencing repair costs exceeded the combined tax receipts of all levels of government.

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