Pages I refer to often

  • Income Distribution in the US
    How is our income distributed? Well, it is pretty concentrated. How concentrated? Take a look.
  • Progress and Poverty, by Henry George
    Here are links to online editions of George's landmark book, Progress & Poverty, including audio and a number of abridgments -- the shortest is 30 words! I commend this book to your attention, if you are concerned about economic justice, poverty, sprawl, energy use, pollution, wages, housing affordability. Its observations will change how you approach all these problems. A mind-opening experience!
  • Wealth Concentration Tables from 2004 SCF: Bottom 90%, Next 9% and Top 1%
    Aggregated data by net worth quantile, for various kinds of wealth. With calculations you won't find anywhere else!
  • Wealth Concentration Tables from 2004 SCF: 50-40-5-4-1
    These tables show how concentrated the ownership of various kinds of assets are. With calculations you won't find anywhere else! This version is less aggregated: Bottom 50%, Next 40%, Next 5%, Next 4% and Top 1%.


Books I Value

  • Henry George: Progress and Poverty: An inquiry into the cause of industrial depressions and of increase of want with increase of wealth ... The Remedy
    This is perhaps the most important book ever written on the subjects of poverty, political economy, how we might live together in a society dedicated to the ideals Americans claim to believe are self-evident. It will provide you new lenses through which to view many of our most serious problems and how we might go about solving them: poverty, sprawl, long commutes, despoilation of the environment, housing affordability, wealth concentration, income concentration, concentration of power, low wages, etc. Read it online, or in hardcopy.
  • Bob Drake's abridgement of Henry George's original: Progress and Poverty: Why There Are Recessions and Poverty Amid Plenty -- And What To Do About It!
    This is a very readable thought-by-thought updating of Henry George's longer book, written in the language of a newsweekly. A fine way to get to know Henry George's ideas. Available online at and

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« Independent Voters | Main | Quarter days »

September 23, 2010


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Chuck Kollars

William Paine's will essentially said "don't touch the principal!" As neither mortgages nor financial investments existed in New England in 1640, the will expressed that in the very simple words "don't sell the land." Conversion of the trust asset between real estate and endowment fund is apparently not a big issue to the Massachusetts Probate Court (apparently not hampered by an over-literal DIY interpretation of those words), else a reputable legal firm would not have invested so much effort in potential presentations to that court.

The provision to collect "market-level" rents (and who knows what else:-) is contained in a document representing what the School Committee WISHES the trust said, and which is not actually valid unless and until it is approved by the Massachusetts Probate Court. Statements about certain actions being explicitly disallowed by the trust document (for example Feoffees not living on Little Neck) rest on a misunderstanding.


I don't know enough about 1650 conditions to know whether you are correct.

But my understanding is that Paine's trust was clear about not selling the asset. Translating that to not touching the principal, in order to downgrade from an asset virtually sure to appreciate over time to any of a number of things with substantial risk to principal and likelihood of not keeping pace with inflation -- in order to be nice, kind, generous, accommodating to the tenants who really-really-really-really! want to be the ones who receive that appreciation, and are willing to pay 2/3 of a lowish appraisal of what the land is worth in the worst down-market in decades -- seems VERY shortsighted and "gifty" to me.

But if you're one of the people who might reap the windfall, I'm sure it won't look that way to you.

And perhaps if you're one of the people who was supposed to be collecting market-level rents on behalf of the local school district, and you let your attention wander to other priorities, you might be grateful to find a sort-of-graceful way out that would make 167 people, including 40 year-round Ipswich residents, happy and appreciative.

But this is not a win-win situation. The schools of 2025, 2050, 2075, 2100 and beyond lose.

Suppose that in 1931 or 1933, the Feoffees had sold Little Neck to the Class of 1931 tenants. What do you think would be available to the schools from this trust now? How much would the annual income be? How much would the principal be? (And how much would smart lawyers and investment fellas have made, versus what the schools received? Not a trivial question, btw.)

At least if Ipswich and the courts require the Feoffees to keep the asset intact, someone in the future can do what the trust calls for. But if the asset is sold, there is no such opportunity.

Would you consider that to be in the best interests of Ipswich? Please explain it so I understand where you're coming from.

Chuck Kollars

Before responding to your issues, let me first stop and emphasize that you have not responded to one of mine! As detailed in the second half of my previous comment, your references to "the trust document" are apparently incorrect! Worse, what you've been referring to with statements like "the trust says ..." seem to be based on a draft document produced by an interested party --specifically Ipswich's School Committee-- that presents what they WISHED the trust said. What's your response???

Next, a main point that might be judged new to this discussion:

The assumption that the motivation for converting from a property trust to a money trust is the benefit of the current tenants underlies an awful lot of what's said. Removing that assumption also removes the great swaths of reasoning that are built on it. Just because it feels "gifty" _to_you_ doesn't mean it really is "gifty".

The real motivation for converting from a property trust to a money trust is more prosaic: administration has become too complex for amateur Feoffees to do in a sufficiently open manner. This was already the case forty years ago; Ipswich has been cashing in "good luck" chips for an awful long time already. The overload contributed greatly to the lack of transparency and public accountability and hence malfeasance ...which is one of the biggest issues front and center right now. (To put it bluntly, it's a whole lot easier to "audit" an endowment fund than a property management operation.) Knowing what a summer colony really needs is "social engineering" and typically requires expertise that amateur Feoffees don't have. Here too Ipswich has been lucky: having one Feoffee that makes extended visits to the summer colony every weekend and another that summered there as a youth. The accounting job is quite large and intricate; the idea of "running the summer colony out of a personal checkbook" sounds a little loony. Once again Ipswich has been lucky: having a hyperactive Feoffee who's very good with numbers.

And finally, my responses to some of the questions you raised:

The relevant words of William Paine's will are "unto the free scoole of Ipswitch the little neck of land at Ipswitch knowne as Jeferry's neck, the which is to be and remaine to the benefitt of the said scoole ... for ever as I have formerly intended and therefore for the sayd land not to be sould nor wasted". So yes the literal words are don't "sell" (or "waste") the land. What those words _meant_ though isn't entirely clear to everyone. It may be necessary simply for people to agree to disagree here. In any case, the only interpretation that really counts is the one that will be supplied by the Massachusetts Probate Court. Although I'm not a lawyer, I have enough experience with the legal system to know that both word meanings and decisions sometimes lean quite differently in law-land than they do in "common sense".

A specific example is the word "grammar" in "Feoffees of the Grammar School". That's just an old word for "elementary" school, right? Wrong! It was a special school that concentrated on Latin and Greek, especially declensions, hence "grammar". (Check out Ezekiel Cheever, especially his book "Accidence: A Short Introduction to the Latin Tongue".) The sort of school most pupils attended and that developed into our public schools was called "reading school". Who knew?

I don't understand what you mean by not keeping the trust intact. If the asset is real estate ownership and rents are collected and Feoffees oversee the process, that's "intact". If the asset is an endowment fund and interest is collected and Feoffees oversee the process, that's "intact" too! There's a critical distinction that I find missing distressingly often in discussions about this issue: the distinction between liquidating the trust by selling the land once and for all, and rolling over the proceeds of selling the land into an endowment fund managed by The Feoffees. Nobody has ever been talking about liquidating or terminating the trust. When folks say "selling the land" they really mean rolling over the proceeds into a managed endowment fund; I only wish they said so more explicitly.

Fears that the principle would disappear because of investment snafus are dramatically overblown. Proposed trust language includes the words "invest Trust assets in accordance with the prudent investor rule set forth on Massachusetts General Law c. 203C or any successor statute". Attempts to get a higher rate of return involve more risk; we learned that when the current financial crisis reduced the value of so many retirement accounts. But The Feoffees would explicitly be disallowed by law from pursuing any such strategy. Hence really bad things would be very unlikely to happen.

Fears that a money trust will eventually evaporate because of inflation may have been realistic as recently as fifty years ago, but they aren't any more. Proposed rules for administering an "endowment fund" include specific requirements for maintaining the inflation-adjusted amount of the asset. Does there remain some chance the asset will drop in value? Yes, nothing is certain. Land isn't a sure bet either. Because Little Neck is valuable right now, it's easy to forget that's in no small part due to luck that wasn't foreseen: Little Neck wasn't worth much back in William Paine's time, and nobody back then predicted what it would become. A future change in environmental rules could easily render it uninhabitable once again (Little Neck is mostly solid rock, right on the open ocean and bordered on one side by an endangered river and on the other by sensitive marshes; and there's currently a very serious erosion problem on part of it that isn't rock).

The current timing of a conversion sale is indeed not the best it could have been. The conversion is being forced to happen right now simply because Ipswich schools haven't received any Feoffees income at all for three years. Anyway, it may not be as bad as it seems: water-oriented property values have not cratered like the rest of the real estate market (the questioned appraisal says so:-), and proposed sale prices have increased right along with skyrocketing water-oriented property values: $7M in 1999, $10M in 2001, $26M in 2008, and $29M in 2010.


Chuck, if the trust as written said something other than what the School Committee's extract of the Trust said, then of course that needs to be corrected. Calling them interested parties as if their PERSONAL interests were at stake, though, is somewhat different from identifying those who seek to buy Little Neck for their own personal benefit -- that's not "tit for tat." Their interest is supposed to be in maintaining the trust for the benefit of the schools, and they should meet any other proposal with extreme skepticism.

It seems reasonable that School Committee's primary concern ought to be the good of the Schools for which they are responsible, with, perhaps, an emphasis on the short term. The Feoffees' primary concern ought to be the good of the beneficiary, long term. That is, they ought to be managing the asset of the trust in such a way that it provides an income to the schools this year and next and the year after -- a growing income, not a declining one -- and caring for the asset which throws off this income with foresight, anticipating future needs and accruing for them, and providing the services to the tenants which are most effectively and efficiently provided on a large scale. (For example, it might make great sense for the Feoffees to contract with someone to mow the laws of those tenants who want their lawns mowed by a contractor. If the town doesn't do trash pickup, the Feoffess might logically arrange to provide that service to all, rather than leaving each tenant to manage trash on their own. These are things that are more efficiently done on a large scale.)

I agree that the skills required to manage an asset like Little Neck are far more complex than those required of an agricultural landlord and collecting rent after harvest each year. But the Feoffees could pay a manager who would hire a lot of those services and report back to the Feoffees. Property management firms do some of these things, for example; commercial landlords do some of these things. Those skills exist. And there is no reason that the Feoffees all need to have them; they need to know how to manage them. They need to maintain the systems and the common structures, but don't need to concern themselves with the cottages which are individually owned. But all those things could be efficiently managed for far less than the market rental value of the land -- and well done might even increase the amount that future tenants would be willing to pay for the right to occupy one of those lots and have access to the 50% of the land which is commonland. (Just as inland Ipswich residents value their parks, which are maintained by the community for the enjoyment of all, but which contribute more to the value of neighboring properties -- unless too much activity becomes a nuisance.)

The tenants would not have made an offer if they didn't think it was in their own best interests. But no one would expect them to make more than a minimum offer. And apparently that offer assumes that the past rent they've been escrowing instead of paying to the Feoffees would be part of their down payment rather than immediately turned over to the Feoffees as back rent -- a sort of lease-to-buy arrangement approved by ... who?? why?? (Can't blame them for trying, but why would an impartial authority do anything but laugh at it?)

To the question of making the investment liquid. Even if Mr. Payne failed to write his wishes in granting the Trust in language that would be interpreted in 2010 as he apparently intended, what is the sense in "diversifying" the holdings into assets of other classes, and in making it possible for future Feoffees or School Committees or Town Meetings to attempt to make a case for "oh, just a little for this vital purpose to benefit the students this year (and alternatively, for the next 4, 10, 20 or 50)" -- at the expense of continuing to provide an income whose tendency is to rise over time, as market rents do.

Popular ignorance of land economics is amazing, and there is no reason it should be any less in Ipswich than anywhere else. But there is a long-lasting effect for those in Ipswich who seek to protect the interests of the schools and students of future decades and centuries not understanding what Mr. Payne apparently knew in 1650: land appreciates over time. Beautiful views, access to a vibrant city by commuter train, fine breezes, open spaces -- 11 acres or more of non-tenanted space! Will it be straight-line appreciation? No, not as long as we have booms and busts -- but is the market rent in 2010 more than what it was in 2000 or 1990? Yes! (Look at the selling prices of houses on LN, and you'll see that they rose -- and it wasn't because the houses were getting newer! Only a few new ones among a large collection of 1910 to 1940 cottages.)

Can we predict that market rents in 2020 and 2030 and 2040 will be more than in 2010? Yes. (So can the LNLAC, which is why they want to buy the property now, particularly if they can get it at a bargain price at the bottom-of-the-market, with a mortgage from the Feoffees, and the last couple years' worth of rent credited against the purchase price!! Who wouldn't??)

No one can blame the tenants for wanting a bargain. That doesn't rewrite the Trust, or make black white, or yellow blue. As Nancy Reagan said, just say no! They're so used to getting a bargain, getting their way, that they think it worth taking a swing at the big prize. Who cares about the Ipswich students of 2050? Most of the tenants will be dead by then, and their children will be enjoying the possession of that lovely piece of land.

If the people of Ipswich think it likely that sea-level rises will make this land less valuable in the future, and that it is time to take the money and run, they ought to be taking other precautions consistent with that concern.

Money trusts don't just depreciation because of inflation, but also because of fees imposed by brokers, money managers, mutual funds. If you have a 401(k), take a look at the fees you're paying the manager your employer chose, and then compare them to, say, Vanguard or TIAA's fees. A significant share of the gross income disappears into such fees, some visibly, but most invisible to the average observer. (The FIRE sector's profits -- finance, insurance, real estate -- are something like 40% of the total profits in our economy. As Joe Stiglitz put it back in July, they're skimming the cream off the economy. (Not his exact words -- but look for the Stiglitz tag at left, and then look within that for a post written in late July about a talk he gave at the University of Queensland.) Do you want them skimming the cream from the Feoffees' trust, too?

I've raised the question before, but will ask it again: If the Feoffees had sold Little Neck to the tenants in, say, 1931 or 1933, how much annual income do you think they would have now to turn over to the schools, from that sale? And how much do you think the financial services companies would have made over the years? Recall the innocent question, "But where are the customers' yachts?" asked after the investment broker pointed out the yachts owned by his co-workers.

Your last paragraph -- "The current timing of a conversion sale is indeed not the best it could have been. The conversion is being forced to happen right now simply because Ipswich schools haven't received any Feoffees income at all for three years." -- is kind of funny. They are forcing the asset holder via a rent strike? Neat trick! (Reprise the Nancy Reagan response: just say no. If the tenants won't turn over the rent, they are asked to leave. Now.) The escrow funds rightly go to the Feoffees, for the schools. And tomorrow, start collecting the market rents. The current tenants have had time to comply. Enough already!

And I've demonstrated the math that shows that $29 million is a small fraction of the land value on Little Neck. Get real! The good people of Ipswich should be laughing the LNAC out of town, and requiring the escrowed funds to be turned over on their way out.


The Feoffees ought to make the tenants an offer they can't refuse: pay the market rent, or exit!

A year or two or three of not receiving rent on some (even all!) of the land is far better than selling it at bargain-basement prices with all sorts of concessions on past rent owed.

New tenants will present themselves. Not instantly, of course. But advertise it well, and they will come.

Hire a good PR firm, and a good real estate agent, with knowledge of the high-end market in the Boston metro and beyond. They'll hire a good photographer and create a good website, showcasing Little Neck and Ipswich, and you'll have good tenants who will pay their rent and spend their summers and money in Ipswich, and the schools will benefit.

It might be easy to forget that Ipswich is highly accessible by commuter train to people who work in Boston and nearby, and that this adds a value that other summer colonies can't offer.

Work it!!

Chuck Kollars

Sorry to take up more blog space, but I don't know any other way to send a message:

Regarding the wording of the trust, you have still not grasped my point. My point is not that the trust wording differs from what the School Committee wishes it said, but rather that *there*is*no* trust wording, and so saying an action isn't allowed by "the trust document" simply doesn't make any sense. The School Committee's draft is *not* an "extract"; it is the first attempt to write down what has previously been an oral tradition. And it's more than just a straight copying of that oral tradition; it contains some changes and additions of its own.


So you're saying there is no trust? no document? that this is merely an oral tradition? Wow!

You wrote earlier: The relevant words of William Paine's will are "unto the free scoole of Ipswitch the little neck of land at Ipswitch knowne as Jeferry's neck, the which is to be and remaine to the benefitt of the said scoole ... for ever as I have formerly intended and therefore for the sayd land not to be sould nor wasted".

I don't know T&E law, but it seems to me that he was creating a trust via his will. I agree that it doesn't say "highest and best use" but it does say "benefit of school" which would suggest that Payne held the school as beneficiary, not any tenants who might at various points occupy the land, and he seems to me to have been rather clear about not disposing of the land, nor mistreating it nor undercharging on the rent -- but I suppose you might interpret his words differently if you were seeking to make a case for someone else's interests.

How would you interpret Payne's words -- as a 21st century layman who was seeking to discern what Payne wanted future trustees to do, and future courts to enforce? If Payne didn't have access to an attorney, or chose not to use one, or used one who didn't suggest the then-magic words, should his intent no longer be treated as relevant or valid?

If his intent is inconvenient today, should the courts be petitioned to let it be sold in a down market to a low bidder, despite his words, which strike me as pretty straightforward and clear? That's what I hear being argued: if this small committee doesn't wanna, let's let the tenants have it, cheap!

It doesn't seem rational or wise or consistent with the gift, but maybe I take the wrong people or values seriously. Please tell me what I'm missing in what he wrote.

Chuck Kollars

Again my apologies for taking up blog space on a topic where I've already posted my comments and where I'm unsure if I should even be a participant in this discussion. But I don't know of any other way to send a message that attempts to answer your direct questions.

The Little Neck Trust is composed at base of two over-350-year-old acts of Ipswich Town Meeting, a portion of Mr. Paine's will, and three acts of the Massachusetts General Court (i.e. the legislature) with at least two of the acts taking place before there was even a U.S. The Feoffees were created by Ipswich Town Meeting well before Mr. Paine's will; they already existed independently of Mr. Paine's will and originally held quite a few pieces of property (not just Little Neck).

Interpretation of these documents is tricky at best; for example the very fact that Mr. Paine left Little Neck to The Feoffees most likely implies things about his gift that aren't explicitly stated in his will. I won't venture any interpretations, as I'm not a lawyer and do-it-yourself lawyering in this case would most likely just be misleading.


Chuck, of course you should be a participant! You're very welcome here.

I'd not been aware that the Feoffees pre-existed the will. It would be interesting to know what their functions were at the time the will was written, and what was expected of them. I'm assuming that they no longer hold other property.

It seems to me that Mr. Paine's intent was public-minded, and that he left rather clear and reasonable instructions, based on the sentences you provided earlier. If the current group of trustees is unable or unwilling to continue serving in that role -- especially if this is the only asset -- then perhaps the solution is to update the process for appointing trustees -- perhaps calling them something other than Feoffees if that term has come to have sour connotations.

If I left a significant long-term gift for some public entity, and the successor trustees failed to act in ways consistent with the terms of my gift, that wouldn't be a reason to sell the gift to a single bidder, at a bargain price, in a down market, without seeking competing bids. It would be a reason to replace the trustees with an entity that would manage the property, compensated and overseen, for the benefit of the intended beneficiary. Isn't that what probate courts exist to ensure and supervise?

Obviously I am a layman, but it seems to me that his intentions were clear and selfless, and offered a significant benefit to the community. And that efforts to subvert it, particularly for private gain, are just plain wrong.


As a post-script, it seems to me that Mr. Paine's instructions about not wasting the land make it pretty clear that he wanted it maintained well and expected approximately market-level rents to be collected. And his "not sold" is pretty emphatic.

Karen Sims

I've only become aware of all this today, when it was pointed out by another member of the Paine family. I am not a direct descendant of William, and have no basis to intervene in the case.
I did a quick search in Old Lyme CT where there are also seasonal houses. The cheapest listing I found was $299,000 for a 2 bed 1 bath, .2 acres. No common property, but beach rights. From what I've been reading this is roughly comparable to the least upgraded cottages in the Paine trust. Note that that Old Lyme is on Long Island Sound, not the ocean, and no where near as attractive. And Old Lyme has a "sewer avoidance" policy which keeps the houses seasonal.

Subtract a house value of $50,000 and that's a minimum of 34 million for the land if all the lots are that small, not counting the common property. If it's going to be sold, put this property on the open market.
Any agreement for sale to the proposed condo association should also include transferring the debts for the capital improvements, and a fully funded escrow for additional capital improvements, so that these improvements do not fall on Ipswich. So they should pay more anyway.

Get new Trustees, hire a retired city manager to manage the property, buy back the cottages as they come on the market and improve or push in as necessary to a plan. Make the plan.


Old Lyme is many miles from Boston and many miles from NYC. It is less accessible from Hartford than Ipswich is from Boston -- no commuter train.

Long Island Sound is lovely and scenic, but does not compare to Little Neck's setting.

I agree that the debt for the septic work should go along with the property that is getting the benefit of it, and that the value of the land is what it is in part because that work has been done (along with the huge locational value).

I don't see why Ipswich or any trust-related entity should have to buy back the cottages as they come on the market. They're not worth much, but the tenants should have been under no illusions about the connection between paying market rent and having the right to use the land, and the connection between failure to pay rent and their responsibility to remove the cottages. They can be knocked down at public expense, I suppose, but I suspect that somewhere in the commuting radius of Boston, there are 167 people who would pay $50,000 for a cottage and be quite willing to pay market rents on the land, now and into the future.

As your distant relative foresaw!

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