Absentee ownership holds Appalachia back

Written by: Dan Radmacher
July 23, 2013

No other single factor has done more to hold Appalachia back economically than the huge percentage of land in the region owned by absentee landholding companies.

In 1974, Tom Miller, a reporter for the Huntington Herald-Dispatch, wrote a striking series entitled, “Who Owns West Virginia?” Through painstaking research, Miller found that two-thirds of the state was owned by large, absentee land-holding companies.

Miller found that two dozen out-of-state corporations and land companies, all with ties to mineral industries, own a third of West Virginia’s privately held land. In 27 West Virginia counties, absentee land-holding companies own more than half the land. An ownership study in the 1980s found the same pattern across central Appalachia. For instance, in Marin County, Kentucky, one company owned one-third of the surface area and more than half of the mineral rights. There’s no reason to believe that this pattern has changed across central Appalachia.

These corporations have very little connection to the region — when Miller wrote his series in 1974, only two West Virginians served on the boards of directors of the 10 companies that held title to half of the state’s land. Sweetheart deals with counties combined with rigged state systems for mineral reserve valuation guaranteed low assessments — and minuscule taxes — on the land.

The concentration of ownership has not been good for the citizens of central Appalachia, or its political system. As historian John Alexander Williams said, the state’s leaders “were content with their roles and their profits as middlemen for the absentee owners of the state’s natural wealth.”

Academics who have studied the issue have found that regions with large tracts of corporate holdings tend to have high unemployment and low standards of living. Natural resource wealth is bled from Appalachia with little gain returned to its citizens. Central Appalachia is essentially a corporate colony.

Many of the issues plaguing the region today can be traced back to this factor.

Low tax revenue from the huge tracts of unimproved land lead to poor government services, including inadequate education and the lack of public water and sewage systems. Economic development is hindered because companies interested only in exploiting mineral or timber resources lock up huge tracts of land. Because unimproved land is taxed at a fraction of the cost of developed land, it’s actually in these companies’ interests not to develop the land and simply wait for the resources to be extracted.

We worked with a client a few years back in Logan County. A coal company wanted to put in a mine face on his property. He agreed, and all he wanted was for the coal company to find him an equivalent acre of land elsewhere in the county. That turned out to be so difficult that the coal company had to pay $350,000 for a single acre. That’s closer to what land should cost in downtown Chicago or Boston, not rural Appalachia.

Affordable housing is also difficult to come by because so little land is left in citizens’ hands.

How this came to be is a long, complicated story with roots tracing back to pre-revolutionary days when the colony of Virginia offered land to those who explored its western reaches. After the Revolutionary War, western land was offered as pensions to war veterans. Speculators purchased these grants from veterans to compile large holdings. There were overlapping claims and confusion, especially as pre-Civil War settlers made their own claims.

Absentee owners had more political power and legal acumen than the farmers and other settlers and were better able to defend their claims. The land companies used other methods, as well, to amass large holdings. Many Appalachian residents have stories of grandparents in remote hollows who were persuaded by land agents to sign over mineral rights for a fraction of their worth.

Absentee ownership is a primary reason that central Appalachia, despite its abundant mineral wealth, remains one of the poorest regions in the nation.

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