Realtor Income Exploration: Crowdsourced Funding for Agent Fees

Introduction:

In our last Real Estate Time Capsule, we discussed the events in 1796 that impacted the United States and its real estate industry, such as at that time. It was the year that the Jay treaty was ratified by both parties, and it took effect. That had a great effect on the lands of the Great Lakes region. That was also the year that the Land Act was enacted to encourage settlement in the Northwest Territory. For this Time Capsule, we’re going to look at the events of 1797 and their significant impacts on real estate. 

Three Key Points

1. XYZ Affair: The XYZ Affair was a political and diplomatic standoff between the United States government and the Republic of France. The political tension resulted in the Quasi-War, an undeclared war between the two countries fought through naval engagements. 

The XYZ Affair was caused by the alleged demands of bribes from American diplomats who were in France to negotiate terms of a treaty with France like that of the Jay Treaty with Britain. The name XYZ came from substituting the letters X, Y, and Z for the names of the three French officials who demanded bribes in American documents. The revelation of the bribe demands angered the American public and further strained the relationship between the former allies which was already deteriorating significantly.  

 2. Invasions: Interestingly, two invasions took place in 1797. The first was known as the Battle of Fishguard. Although this was an invasion of France on British soil, the leader of the invading force was an American colonel named William Tate. 

The second was an invasion of San Juan, Puerto Rico by the British headed by Sir Ralph Abercromby. It was the largest invasion of Spanish territory in the Western Hemisphere. It was also the worst defeat of the British navy at that time.  

 3. The Panic of 1796-1797: The financial panic that started the previous was in full swing by 1797. The panic was caused by speculation schemes in the United States that issued paper in exchange for lands in the West. The largest of these resulted in the formation of the North American Land Company.  

By 1797, the schemes had been exposed for what they were, and many speculators ended up in debtors’ prisons. The panic is very similar to how many of the financial problems would start in the future. It also highlighted how connected the British and American economies were at the time. The British parliament also passed the British Bank Restriction Act 1797, which cut off many American speculators from European funding and hastened the ruin of some of those involved. 

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Headline Real Estate News Stories in 1797

The XYZ Affair which signaled the falling out of the once allies, was the result of the deteriorating relationship between the two countries. It was the monarchy in France that supported the American Revolution. Although the American Revolution supposedly inspired the Revolutionary government in France, the governments of the two countries did not see eye to eye. 

French government officials were angry that the United States signed the Jay Treaty with the British when they were still at war. This prompted them to authorize the harassment of American shipping. That was the reason why the American diplomatic mission was sent to France, resulting in the crisis. 

What Historic Real Estate Events Shaped 1797?  

The American Revolution was the main influence for the events that took place in 1797. The XYZ Affair for example was the direct result of the conditions that the country was in at the end of the conflict. 

Economic Factors, Supply, and Demand  

The Panic of 1796–1797 was still wreaking havoc on the country’s economy, particularly the coastal cities. The effect of the panic would be felt for several years afterward. By 1800 it would cause the collapse of numerous merchants in the United States. The panic made people realize how connected was the United States economy with the rest of Europe. 

Government Policies and Interventions  

The XYZ resulted in the deterioration of the relationship between the United States and France. It was used by the opposition in the government to attack President John Adams. The affair preoccupied the newly elected president for the rest of his term. 

Demographic Factors  

At this point, the demographic of the country has not changed much. It still has not seen the dramatic shifts that would happen when the flood of new settlers would start to pour in from Europe. 

Societal Preferences and Trends 

American cities were still relatively small, and most Americans still lived off largely self-reliant farms. The larger cities had merchants, but there were no large companies that employed thousands. 

Technological Innovations  

Amos Whittemore Daybook of West Cambridge (now Arlington), Massachusetts invented a carding machine that was very necessary for processing wool and cotton. He established a factory in West Cambridge that boosted the economy of the town. 

Environmental Factors  

There was still no significant change in the environment of the United States at the time. The vast portion of the continent was still unexplored. 

Transportation and Infrastructure    

The use of horses was still the fastest means of transportation in the United States. The roads were still underdeveloped and so the commerce between the major cities was very minimal. The interconnectedness that would be the result of railroads and improved roads was still decades away. 

1797 was another eventful year for the United States although it was not the best one for American real estate because of the panic. Our next Time Capsule would tackle the year 1798 and the events that took place that shaped the United States.

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For a deeper understanding and look into these topics check out these titles:

The XYZ Affair: