From Land Grants to Loan Farms: Property Rights and the Extent of Settlement in Dutch South Africa, 1652-1750

Alan Dye () and Sumner La Croix
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Alan Dye: Barnard College, Columbia University

No 201706, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: This paper examines a paradox in the formation of property rights in land in the early settlement of the Dutch Cape Colony. In 1652, the Dutch East India Company (VOC) established an outpost at the Cape of Good Hope to serve VOC ships sailing between Europe and Asia. Over the next 75 years, the outpost expanded into a full-fledged VOC colony. As a thin but growing population expanded land claims to graze sheep and cattle. The VOC initially promoted settlement by extending well-specified and enforced land grants in restricted zones. But by 1714 it transitioned to accommodate rapidly expanding settlement with a more loosely specified form of property rights, the loan farm. We develop a profit-maximizing monopsony model to explain the VOC choice to transition from land grant to loan farm. We conclude that the decline in the population size and ability of the Khoikhoi, a first people who inhabited the Cape, to resist Dutch incursion was critical to the transition, as it lowered the government costs of enforcement and enabled the rapid expansion of the pastoral economy.

Keywords: Cape Colony; sheep; cattle; property rights; loan farm; frontier; land tenure; VOC (search for similar items in EconPapers)
JEL-codes: N47 N57 P48 Q24 (search for similar items in EconPapers)
Date: 2017-12
New Economics Papers: this item is included in nep-agr, nep-his and nep-law
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