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Trusts

in several senses of the word:

Henry George: Political Dangers (Chapter 2 of Social Problems, 1883)

[07] Thus the mere growth of society involves danger of the gradual conversion of government into something independent of and beyond the people, and the gradual seizure of its powers by a ruling class — though not necessarily a class marked off by personal titles and a hereditary status, for, as history shows, personal titles and hereditary status do not accompany the concentration of power, but follow it. The same methods which, in a little town where each knows his neighbor and matters of common interest are under the common eye, enable the citizens freely to govern themselves, may, in a great city, as we have in many cases seen, enable an organized ring of plunderers to gain and hold the government. So, too, as we see in Congress, and even in our State legislatures, the growth of the country and the greater number of interests make the proportion of the votes of a representative, of which his constituents know or care to know, less and less. And so, too, the executive and judicial departments tend constantly to pass beyond the scrutiny of the people.

[08] But to the changes produced by growth are, with us, added the changes brought about by improved industrial methods. The tendency of steam and of machinery is to the division of labor, to the concentration of wealth and power. Workmen are becoming massed by hundreds and thousands in the employ of single individuals and firms; small storekeepers and merchants are becoming the clerks and salesmen of great business houses; we have already corporations whose revenues and pay-rolls belittle those of the greatest States. And with this concentration grows the facility of combination among these great business interests. How readily the railroad companies, the coal operators, the steel producers, even the match manufacturers, combine, either to regulate prices or to use the powers of government! The tendency in all branches of industry is to the formation of rings against which the individual is helpless, and which exert their power upon government whenever their interests may thus be served. ... read the entire essay

Peter Barnes: Capitalism 3.0 — Chapter 6: Trusteeship of Creation (pages 79-100)

Trebah Garden is a spectacular piece of paradise in Cornwall, England, a ravine with a huge variety of trees and shrubs that winds its way down to a beach on the Helford River. Several years ago I visited this garden to enjoy its beauty. I soon learned that its history and governance are as interesting as its flora.

The property is first recorded in the Domesday Book of 1086 as belonging to the Bishop of Exeter. It passed through the hands of many squires and farmers until it was acquired in 1831 by a wealthy Quaker family, which developed the extraordinary garden. In the twentieth century the property changed hands several more times and the garden gradually deteriorated. The last private owners sank a small fortune into restoring the garden, then donated it to the Trebah Garden Trust, so it could be opened to the public and preserved for future generations.

Today, anyone can become a lifetime member of this trust by making a donation of £250. Members get free access to the garden (other visitors pay an admission fee) and elect a council to manage the property. They receive an annual report, audited accounts, and notices of meetings at which they may vote and submit resolutions. At present, there are about a thousand voting members of the trust.

As I wandered through the acres of ferns and rhododendrons, it struck me that Trebah is a microcosm for the ideas in this book. It has passed from private ownership to a form of common ownership that enables it to be shared and preserved. If we think of the world as an assemblage of gardens — that is, of ecosystems in which humans play active roles — the Trebah model becomes extremely interesting. It illuminates both a process by which natural gifts can shift from private to common ownership, and an institutional model — the trust — for managing such gifts as permanent parts of the commons.

Trusts are centuries-old institutions devised to hold and manage property for beneficiaries. The essence of a trust is a fiduciary relationship. Neither trusts nor their trustees may ever act in their own self-interest; they’re legally obligated to act solely on behalf of beneficiaries.

Trusts are bound by numerous rules, including the following:

* Managers must act with undivided loyalty to beneficiaries.
* Unless authorized to act otherwise, managers must preserve the corpus of the trust. It’s okay to spend income, but not to diminish principal.
* Managers must ensure transparency by making timely financial information available to beneficiaries.

These rules are enforceable. The basic enforcement mechanism is that an aggrieved beneficiary or a state attorney general can bring suit against a trustee. When that happens, the trustee must prove she acted prudently; if there’s any doubt, the trustee is fined or fired. As Supreme Court Justice Benjamin Cardozo once put it: “A trustee is held to something stricter than the morals of the marketplace. Not honesty alone, but the punctilio of an honor the most sensitive, is the standard of behavior.”

A trustee isn’t the same thing as a steward. Stewards care for an asset, but their obligations are voluntary and vague. By contrast, trustees’ obligations are mandatory and quite specific. Trusteeship is thus a more formal and rigorous responsibility than stewardship.

Trusts can be in charge of financial as well as physical assets. In this chapter, my concern is natural assets — gifts we inherit from creation. One of my premises is that each generation has a contract to pass on such gifts, undiminished, to those not yet born. If we are to keep this contract, someone must act as trustee of nature’s gifts, or at least of the most endangered of them. The question is, who?

The candidates are government, corporations, and trusts. I argued earlier that neither corporations nor government can fulfill this function; they’re both too bound to short-term private interests. That leaves trusts. ...

A trustee isn’t the same thing as a steward. Stewards care for an asset, but their obligations are voluntary and vague. By contrast, trustees’ obligations are mandatory and quite specific. Trusteeship is thus a more formal and rigorous responsibility than stewardship.

Trusts can be in charge of financial as well as physical assets. In this chapter, my concern is natural assets — gifts we inherit from creation. One of my premises is that each generation has a contract to pass on such gifts, undiminished, to those not yet born. If we are to keep this contract, someone must act as trustee of nature’s gifts, or at least of the most endangered of them. The question is, who?

The candidates are government, corporations, and trusts. I argued earlier that neither corporations nor government can fulfill this function; they’re both too bound to short-term private interests. That leaves trusts.

Common Property Trusts

The Trebah Garden Trust isn’t a rarity. Across Britain, the National Trust — a nongovernmental charity founded in 1895 — owns over six hundred thousand acres of countryside, six hundred miles of coastline, and two hundred historic buildings and gardens. It has over three million members who elect half of its fifty-two-person governing council (the other half are appointed by nonprofit organizations that share the trust’s goals). In the United States, there are now over fifteen hundred Trebah-like trusts, protecting over nine million acres. On top of that, the fifty-five-year-old Nature Conservancy protects more than fifteen million acres.

Let’s posit, then, a generic institution, the common property trust. It’s a special kind of trust that manages assets that come from the commons and are meant to be preserved as commons. Common property trusts manage these assets first and foremost on behalf of future generations. They may have secondary beneficiaries, such as public education or residents of a particular locale, but such living beneficiaries take backseats to the yet-to-be-born. These trusts carry out their missions by owning and managing bundles of property rights. Here are two examples from my own backyard: the Marin Agricultural Land Trust (MALT) and the Pacific Forest Trust (PFT). The demise of family farms and the loss of open space around cities are seemingly unstoppable trends. Yet in Marin County, just north of San Francisco, family-owned dairy, sheep, and cattle ranches have survived. A big reason is that ranchers there have an option: selling conservation easements to MALT.

A conservation easement is a voluntary agreement between a landowner and a trust that permanently limits uses of the land. The owner continues to own and use the land and may sell it or pass it on to her heirs. However, the owner gives up some of the rights associated with the land — for example, the right to build additional houses on it or to clear-cut trees. The trust that acquires the easement makes sure its terms are followed by the current as well as future owners.

In Marin County, MALT has preserved nearly forty thousand acres of farmland by buying conservation easements from ranchers. This represents about a third of the land currently farmed. The ranchers receive the difference between what the land would be worth if developed and what it’s worth as a working farm. In effect, they’re paid to be land stewards and to forgo future capital gains.

Most of MALT’s money comes from public sources. What the public receives isn’t an old-fashioned commons of shared pasturage, but a lasting pastoral landscape and a viable agricultural economy. That’s not a bad alternative to suburban sprawl.

In much the same way, the Pacific Forest Trust acquires what it calls working forest conservation easements from private woodlands owners. Some of the easements are purchased, others are donated by owners in exchange for tax benefits. Here again, owners keep their land but agree to forgo nonforest development and to harvest trees sustainably.

PFT’s goal is to protect not only forests themselves but the many species that live in them, as well as the ecosystem services — such as clean water and carbon absorption — that forests provide. As with MALT, some of PFT’s money comes from public sources. In return, the public gets healthy forests for considerably less than it would cost to buy and manage them outright. read the whole chapter

 

 

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