Ownership

0:00Ownership of Property All property that is property is subject to ownership. And property can be owned in several ways. It can be owned individually, it can be owned jointly, it can be owned corporately, or it can be owned collectively. Now, those are four different ways of owning it, and I am going to talk about it in detail in a minute, but first let me point out that property doesn't have to be owned to be property. Property can exist in an unowned condition, it can exist in an owned condition, and it can also be in a state of conflict where we aren't sure either what the property is or who owns it. Let me take unowned property first and show you what we have here.

0:55When we are talking about unowned property, we are talking about a piece of property that is subject to ownership, that is, it has all of the characteristics that would make ownership possible but for some reason at that particular time it isn't owned. Now, unowned property falls into two general classifications. There is what we usually think of as virgin property. That is to say, property, it would always be of the natural order, that is, it would and Relate to Natural Resources, the Land, Water, Air, Minerals, Metals and so on, that exists, it would be subject to ownership, but there just isn't an owner, and one hasn't appeared and therefore it is what we call virgin property or virgin territory.

1:42Today there isn't very much of that type of land property left in this world, if any. Of course, we do have land under the oceans that we have never become the owners of. It's there, and it is land. But there's so much water on it, we don't find it useful. And then, of course, we could own the water. But it's so hard to make a permanent boundary of different sections of water that we haven't done very much of that either. So in the main the oceans are unowned, large bodies of water in a sense are unowned, at least they are not owned privately, and the land under them is in a sense unowned. And there may be in remote areas of the world certain islands that have escaped notice and remain outside of ownership.

2:33That is entirely possible. My point would be that they are property. They are subject to ownership, but for one reason or another they are not owned. Perhaps more germane to this particular point of virgin property would be the moon at the present time. Now, that's just a great big piece of real estate, flying around in the sky. But it's unowned. And the reason, of course, is that there aren't any owners there, so there is no way that we can practically make use of it at the present time. The time may Come, in which case it perhaps will become real estate and it will be owned. It is property. All you have to do is to supply the missing ingredient of an owner and all the other factors are there. So that's property. The whole moon is property, but it's unowned property.

3:26So that would be one type of unowned property. Now another type of unowned property, the The only other type would be property that has been owned but now for some reason is disowned by the owner. This usually occurs on a daily basis with all of us. We obtain property and then we use it up. That is, we use up that part of it that we got it for. We absorb its utility, whatever it was, and that part of it that is left, we discard. That's why we have wastebaskets and garbage disposal units and so on. A woman goes to the store and buys a can of beans. She comes home and she attacks the can with a sharp instrument, destroys its symmetry and then empties the contents into another container.

4:16Now what does she do with the can? Well she probably throws it away. She doesn't want it. Why? Doesn't she realize that she probably paid more for the can than she did for the beans that were in the can? So she may realize it, but she didn't want the can, she just wanted the beans. Well why did she buy the can then? Was somebody taking advantage of her? No. No, she bought the can because it's so inconvenient to bring the cooked beans in their sauces home in her hand. So she got it in a can, and she brought it home, and then the can had fulfilled its utility, so she took it out of that can and put it in another container, at which point she has no further use of the can. Now the can is a property, but at this point she disowns it. It is of no further interest to her. She has utilized it, and it's gone as far as she is concerned. She wants to get

5:09rid of it. And so we do this type of thing all the time. We buy various things. We utilize them. There's often a residue left, or some part of it is left, and we throw that out, because it's no longer valuable to us. In other words, the reason we acquired the property in the first place is because we thought we saw a value in it and then when the value is gone we want to get rid of it. So one of the things about all ownership would be the element of value. If we didn't value it at all we would never even try to become the owner. And the next thing that you can see here readily would be the concept of boundary because when you buy a can of beans what you're buying is the beans with a boundary around and it has to be the kind of boundary that will protect those beans retain their freshness and their succulents or whatever it is you get from beans and

6:01and then once you once you don't need that boundary anymore because you're going to consume them well you throw the little package away much of our food comes today this way it comes all prepackaged it's a very intelligent way of handling properties that we want to handle this way and usually when we're through, we throw away the packaging. That may be one of our problems. We have so much good packaging around that we can't even find enough wastebasket for it and so we litter the landscape and we've got other problems as a result. But that is just another opportunity for another free enterprise to come along and solve that problem as a matter of fact. But we'll talk about that some other time perhaps. Anyway, we have the unowned property that results from the owner disowning something that at one time he valued.

6:54Many times I suppose we usually think of unowned property in this connection as being either broken or partly used up and of no particular substance insofar as size and magnitude is concerned. Actually, according to the figures I have seen, the American buying public abandons is about two million automobiles every year. Most of them, fortunately, are driven to a junkyard and the owner just gets out and says, it isn't worth anything, but this is a junkyard, why don't you take it? And he disowns it. Now it's quite possible that you could say, and I think it's probably true, that most junkyard dealers would say, fine, and they then accept the ownership of the car and therefore it isn't really out of Ownership. It is simply converted into what we call junk. But usually title doesn't pass at this time. That is the legal title. The owner just forgets it, and the junkyard dealer doesn't bother to have it transferred to him. The car goes out of service. In effect,

8:03legally speaking, it is no longer a piece of property. It is a piece of junk. It has been disowned. And, of course, in point of fact, there are quite a few thousand people every year who don't even bother to drive their cars to the junkyard. They just abandon them on the highway, which is too bad. And that does create some littering and it's unfortunate. But that's what I mean by abandoning or disowning a property. Yet that car at the time it was first made and first sold was worth quite a bit of money, I would presume. We have even gone through the processes of abandoning real estate and improved real estate at that. In fact, we have whole communities that at one time were built up, a lot of money invested in them, many people living in this area wherever it was, and then the whole community has been abandoned and simply given up. Here's a case of disowning whole areas, and we call these communities, of course, ghost towns. The only people that own them now are the

9:36in the Old West, possibly back east. I'm not too familiar with that. There are certainly places in the country where perhaps they ought to become ghost towns, but as I say, that's no longer being done. In any case, the point is that we can do this. We can acquire property and we can get rid of it. Normally we would try to sell it, and hopefully at a profit, but if we can't sell it, well maybe we can give it away. But if we can't give it away and we can't sell it and we still don't want it, we may end up disowning it. So property comes into our hands and we become owners and then it also goes out of our hands and we become ex-owners. We just don't want it anymore.

10:23So property flows in and out of human ownership. Now that's unowned property. Now let's go to owned property. Boundary can be owned, as I have already mentioned, individually, jointly, corporately, or collectively. The characteristics of all ownership, whether it relates to the individual, or joint ownership, to corporate ownership, or to collective ownership, there are certain characteristics that have to apply. First, the concept of value, which I have already given you. Then the concept First of Boundary, we have to know what it is we own and where it is. And then the third element of ownership is the element of control. Whoever is the owner has to treat that property as though it is an extension of himself. That is to say, he becomes the decision-maker over the property just as he would if it were his arm, his leg, or some other part of him. That's is, in fact, what ownership means. Now when we have individual ownership, we simply have all of the attributes of ownership converging on the single person. The person owns a property.

11:43He values it. He knows how big it is and where it is. And he exerts the decision-making function over it. He exercises sovereign control. And when we use the term sovereign control, we We mean he is the ultimate authority over that property. Keep this in mind. All property is subject to human control. Somewhere, somebody can and will make an ultimate decision over that property. Whoever is in a position to make that decision is the owner. That's how how it works. So if you have real ownership, the party in a position to value, to bound, and to control in the sense that his decisions will be acted upon in respect of the property, that's the owner. That's the real owner of the property.

12:42Now let me mention this matter of value. In the early days when we were first studying in this area, we used to think that for a property to really be a property, it would have to be valued by at least two persons, because the idea was that it would have to be a property that was marketable. And, of course, nothing is marketable if you don't have competing bids. You have to have somebody willing to buy and somebody willing to sell, or you can't market anything. And so the idea was that at least two people would have We now recognize the element of what is called sentimental value. It would be possible for a person to value an item that nobody else in the world would value and it would still be a property, even though you couldn't get a competing bid. An example of what I mean could well be this. We have a young lady, for instance, going on her first formal dance It's a very big affair in her life, and her young man calls on her and presents her with

13:47a corsage for the evening. By the time the evening is over, the corsage, of course, has been through the wars, but she extracts a blossom from it, she takes it home, and she presses it in a book as a never-to-be-forgotten memento of a never-to-be-forgotten evening. Now, it is unlikely that we could find a competing bidder for that crushed blossom in the book. I understand from my economist friends that the bids on dried pressed flowers are today very low. Nonetheless, as far as the girl is concerned, it could be the most valuable property she has, depending on her sentimental attachment to the memory and to the man. So that's property. It doesn't have to be valued by more than one person to fulfill that part of the ownership triumvirate.

14:40Now, let me take joint property and show you how joint ownership occurs. When we have joint ownership, we have two or more persons who own a given property. Now, the characteristic here is that the amount of the property owned must be clearly indicated, or you don't have joint Joint ownership, you have ownership in conflict. In other words, if my wife and I own a house together, we would be called joint owners, but it would be specified that each of us owns 50% of the house or that I own 51% and she 49% or it can be 40, 60% or any other The idea that she owns 100% of the house and I own 100% of the same house is not possible.

15:44That would create a condition of conflict automatically. What we try to show wherever joint ownership occurs is the percentage of ownership that resides in each one of the joint owners. There could be two, or there could be any number. We could call it, and sometimes we do call it a partnership, where two or possibly many more, several hundred, or you could have several thousand. There is no known limit to this, where these persons jointly own a given property. For instance, I know of a newspaper where there are 200 partners. They They own it jointly. It's not a corporation. It's joint ownership. Each one of the owners owns a small percentage of the total property. What is important here, however, not only is that the line of demarcation show us the boundaries of the total property, it must also show us the line of demarcation over which each person has sovereignty. So that But if I own 10% or 1% or 50% or whatever it is, there's got to be at least a line

17:00that can be drawn to specify how much of the property is really mine. And of course here's where you get into difficulty sometimes because along with that boundary there should be the element of control. I should be able to control my portion of the total property. Now when it's one big property, it would be hard to draw such a line. An example of the kind of dilemma you could get into could be provided with this illustration. Let's suppose that I'm a father having two sons, and I love both the boys and I love them equally. So I go out and buy one pony, because that's all I can afford, and I bring home one pony and I say to each of my sons, son, this is your pony.

17:47Or, I say, son, you own this pony and you've got fifty percent of it, and your brother owns the other fifty percent. But I don't make any further delineation. Now, who's going to ride the pony? I have perhaps created a condition of civil war in my own household because I haven't specified the boundary of control. Control is one of the vital elements of Ownership. And so if I want to keep peace in the family, I better be a little more specific. Now I can divide the pony up any way. I can say, you know, let's divide it in half lengthwise or crosswise, but that's not too practical. I can introduce another boundary, the boundary of time. We live in a space-time continuum, and we can bound property in time as well So, I could say to my sons, son number one, this is your pony, just as much as it is your brother, son number two, but you get to ride on the pony and make all the decisions concerning

18:54it on Monday, Wednesday, Friday, with the understanding that at the end of those days the control passes to your brother and the pony's got to be in good shape. You can't have done something to harm your brother's interest in it. And son number two, it's yours on Tuesday, Thursday and Saturday with the understanding that you have to leave it in good control and in good condition for your brother and on Sunday it reverts back to me. This way I could work it out so that there wouldn't be a conflict. But if I don't make some such delineation, I can get into real difficulties. And I might point out that this can be a very real problem with the current practice in and so many places where we have encouraged joint ownership of all kinds of what is sometimes called community property. So you have a husband and wife who jointly own a house. Well, that's great. But you can't very well saw the house in half. And now we get to the place

19:54where the husband says, I think what we ought to do is sell the house and move to another the location, or perhaps the wife says it, and the other spouse, whoever it is, says, I don't want to sell it. All my interests are here, and I want to keep it. Now what is the house going to do? Houses don't make decisions. People make decisions, and property responds to human decision. Now you can't do both with that house at the same time. If you sell it, well then you hurt one party, and if you keep it you hurt the other. So So it's a very important thing to have along with the boundary that specifies the amount of interest you have in a property, you want to specify where the control resides as well. I'll tell you the kind of partnership, for instance, that is the most successful and that avoids conflict most. And that's the kind where you have a silent partner as well as an active partner. Let one man make ultimate decisions and let the other man be still.

20:54And I've seen such partnerships set up where the actual interest is mutual. That is, each one has a 50% interest. But one party says, well, this is going to be your baby at the outset. You make the decisions. I'm in it and I'm going to get half of any profit. But I'm not going to make the decisions. You make them. And that is usually a better one, a better, more lasting arrangement, more successful, usually, Then one where they each one feel that they have the same amount of authority and they get into a horn-locked, head-on, toe-to-toe, knuckle-to-knuckle confrontation and you can have just one problem after another. So I recommend in joint ownership that you clearly delineate not only the amount of property that is yours, but where the control of that property resides. If you can do Now let's consider corporate ownership. Corporate ownership is a particular type of ownership that was created in an effort to avoid the laws relating to debtors. It is a means of

22:10limiting the responsibility of persons who are going into major investments. The key The key here is this. In order to have corporate ownership, what you do is you create a fictional owner. This is the corporation or the corpus. That's the word that means body. You create a fictional body. And then the corporation owns the assets. And the owners of the corporation And don't own the assets, they own the corporation. So the property is removed one step away from the human owners by putting a fictional owner in between the owners and the property. And that's what is meant by corporate ownership. Now one of the advantages here is that this does give control to the individuals who own the corporation. That is, here you have a The Theory of Money and Credit

23:37Keep your stock. You can sell it. You can give it away. You can burn it up. It's yours. You can do as you please with what's yours. But the fact that you own, say, ten shares of, well, anybody's stock, United Updike, whatever that is, doesn't authorize you to go into a United Updike sales room and say, well, that particular updike over there is mine because I own ten shares of stock. You don't own any part of that. You own ten shares of the overall corporate structure, and that's how that works. That's a special type of ownership that limits the amount of responsibility, and the reason this was done was because of the laws against debtors back in the old days, where if a man went into debt and found for any reason that he couldn't pay it, he would be sold, or not really sold, he would simply He could be convicted of debt and he could be thrown into prison or he could be put into

24:35what was called peonage and then he would have to serve out his life in an effort to pay the debt. Well, let's suppose the debt was quite large. Then his wife and his children could also be put into peonage and this could go on for four generations under the biblical assumption that the sins of the father may be visited on the sons even to the third and fourth generation. And so if a man ran into debts that were large, then it was possible for him to condemn himself and his descendants to virtual slavery until that debt could be paid off. And so to get around that, they created what were called limiteds at first. This was done in England, and the amount of debt responsibility was stated to begin with.

25:28This is a limited operation, and the owners would be responsible up to so many pounds or so many dollars, as the case might be, and beyond that they would not be responsible. And so then you knew when you were dealing with this particular corporation or limited as to the extent of the credit that you ought to extend it, because beyond that these persons were not involved. You see, when the corporation borrows money, the corporation has to pay it back, but not the owners of the corporation, because they didn't borrow the money. The corporation did. So that is what that's for. It provides a cushion between the owners and the property itself, or the obligations, or, of course, the benefits. Whatever would be there, there is a pad between the owners and the property itself.

26:17Now the third or the fourth type of ownership that we're talking about is collective ownership. And this is a very special type of ownership and it does get us into a lot of difficulties. When we have collective ownership, the characteristic is this. We have a property and we are told that each one of us owns the whole property in concert with a great many other people who also own the whole property. Now sometimes collective ownership is also called public ownership or government ownership and this is the kind of ownership that appears there. For example, if you have a public park, it will be said that the park is owned by the people in the area or the taxpayers or whatever and each one of them is an owner and they They own the park jointly with all the other owners who also own it, or actually jointly is an incorrect word there, I should have said they own it collectively with all of the other owners.

27:23I ran into this particular experience myself personally when I was in Colorado Springs and was the editor of the paper there. There's a very nice park in downtown Colorado Springs. It's a block square and it's called Acacia Park and shortly after I had taken up the The City Hall wanted a particular weekend set aside so that people coming up from another town could have use of the park, and therefore they wanted us to run a story to the effect that this park was reserved for this other group on this weekend. So I had a long discussion with the City Manager over who owned the park. And it worked out that he wasn't too sure and neither was I. Because what happened was that the people who paid for the park were the taxpayers, but they couldn't manage the park. This was managed by another group.

28:26But the people who managed the park, well, they really didn't have to pay for it, but the people who used the park didn't have to pay for it and didn't manage it. And you We'll talk more on the subject of property another time, and, of course, the subject of ownership. Thanks very much.