Coasian Contracts in the Coeur d'Alene Mining District

By Higgs, Robert | The Cato Journal, Spring-Summer 2005 | Go to article overview

Coasian Contracts in the Coeur d'Alene Mining District


Higgs, Robert, The Cato Journal


For the greater part of the 20th century, mainstream economists viewed negative externalities as a prima facie justification for government intervention in the market (see Bator 1958). Absent such government action, they argued, nothing would be done to prevent or remedy the damages suffered by third parties as a result of unrestrained "spillovers" or "neighborhood effects." For example, in the words of Joseph Stiglitz (1988: 76), "without government intervention there would be an underprovision of pollution control." Even such staunch defenders of the market as Milton Friedman (1962: 30) and F. A. Hayek (1979: 43-45) conceded that spillovers might justify government intervention, although they embraced neither the "blackboard economics" conclusion that government intervention is desirable and effective in all cases of spillovers nor the "nirvana" standard implicit in Stiglitz's use of the orthodox term "underprovision."

Not until the argument of Ronald Coase's 1960 article "The Problem of Social Cost" began to penetrate the profession's understanding did economists start to appreciate how private contracting--usually viewed as property-right creations or exchanges of various sorts--might be employed to prevent or remedy negative externalities without any government intervention to impose regulation, taxes, or subsidies. Gradually, a literature has developed in which an assortment of cases--private construction and maintenance of lighthouses (Coase 1974), private provision of bee-pollination services (Cheung 1973), private policing (Benson 1994), private provision of highways (Klein 1990, Benson 1994, Klein and Yin 1996), private management of coastal development (Rinehart and Pompe 1997), private improvement of riverine water-quality (Yandle 2004), private indemnification of losses from cattle disease spread by drovers (Anderson and Hill 2004: 147)--illustrates the voluntary internalization of externalities (both positive and negative) in history.

Even now, however, more than 40 years after the publication of Coase's landmark article, economists and economic historians continue to learn about important cases of private contracting to allay pollution problems and, in particular, about the variety of means that private contractors have employed to organize themselves for this purpose and to carry it out. In the present article, I relate the history of an important and little-known case, the voluntary measures that mine, mill, and smelter operators undertook in the Coeur d'Alene mining district beginning at the turn of the 20th century. These parties not only purchased existing private property rights specifically in order to internalize negative externalies, but they engaged in creative organizational and technological innovation to achieve the same end. They did not do so, however, merely out of the goodness of their hearts. The interplay between legal and political proceedings, on the one hand, and the operators' "internalization" projects, on the other hand, lies at the heart of the story.

The Fabulous Coeur d'Alene

The Coeur d'Alene mining district is located in the Idaho panhandle approximately 300 miles east of Seattle and 70 miles east of Spokane. Mining began there after the discovery of gold near the North Fork of the Coeur d'Alene River in 1883 kindled a gold rush that brought thousands of people in search of quick riches. The town of Murray sprang up, "a city a half a mile long" that "had its own lawyers, doctors, gamblers, and women of ill repute" ("Coeur D'Alene Mining District" 1998). By 1885 the rush had subsided, but gold mining continued near Murray for decades afterward. As prospectors fanned out from the original gold rush on the North Fork, they discovered mineral deposits rich in silver, lead, and zinc near the South Fork of the river in 1884, and those deposits became the basis for the development of one of the world's greatest mining districts, known nowadays as the Silver Valley (Ojala 1972: 6-8; Bennett, Siems, and Constantopoulos 1989: 145; Bennett 1994: 6).

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Coasian Contracts in the Coeur d'Alene Mining District
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.