The smoke crosses a boundary the factory's accounts have drawn more firmly than its chimney can respect. Coal is bought, labour is hired, cloth is sold; the washing soiled next door belongs to another household's expenditure. The Collected Smoke put this separation into curves, adding the neighbour's damage to the mill's private cost. Long before that diagram, a neighbour could bring a complaint to a court. The complaint required a different sort of answer. A court had to decide which interference the law would recognise, which use of land its owner could insist upon, and what should happen when the two uses would not coexist. The cost had reached the neighbour already. The question was whether it would be allowed to remain there.
The law of nuisance approached the problem through the use and enjoyment of land. That starting point mattered: an unpleasant consequence was not automatically an actionable wrong, and an actionable wrong was not automatically a command to buy the cheapest filter. The character and seriousness of the interference, the circumstances of the place, and any right acquired against the neighbouring land could change the answer. The old judgments make a set of discriminations where the economist's first diagram makes an addition. They ask what a person living among others must put up with, and where that accommodation ends. There is an economic consequence in every answer, because toleration assigns a burden just as surely as an injunction does. But the judges' reasons must be read before their decisions can be translated into the language of costs.
In St. Helen's Smelting Company v Tipping, decided in 1865, the House of Lords distinguished discomfort from material injury to property. The industrial character of a neighbourhood could bear heavily on what discomfort its inhabitants must tolerate; it did not give a smelter an unrestricted licence to injure neighbouring property. Lord Westbury rejected the contention that the suitability of the locality excused the injury the jury had found, while expressly reserving the case of an acquired prescriptive right. The appeal failed. Industry's usefulness and a district's established character entered the reasoning, but neither dissolved the neighbour's claim merely by being named.
That distinction exposes a choice concealed by the phrase a suitable place. Suitable for whom? A location may be convenient for making copper and still costly to the owner whose trees stand downwind. Calling the district industrial describes its uses; it does not establish that every further injury belongs, without compensation, to those who live beside them. Conversely, a rule that treated every smell or noise as an actionable invasion could make ordinary shared life impossible. Nuisance had to draw a boundary within interference, identifying the burdens of neighbourhood and the injuries against which a neighbour was protected. The resulting line was neither the chimney owner's deed nor a general promise of undisturbed air. It was a judgment about the claims those deeds could sustain in each other's presence.
The confectioner's mortars put time into this boundary. In Sturges v Bridgman, in 1879, they had been used for more than twenty years before the doctor's new consulting room made their noise and vibration a serious interference. The confectioner claimed a right acquired by that long use. The Court of Appeal rejected the claim: the earlier disturbance had not been actionable, so the neighbouring occupier's failure to stop it did not supply the acquiescence on which prescription depended. The court affirmed the injunction. Being first in time did not, on those facts, turn the adjoining garden into a permanent buffer for the confectioner's machinery.
The doctor did not win by proving that medicine produced more value than confectionery. The court considered the neighbour's inability to prevent conduct that had not yet given him grounds for proceedings, and the consequences of allowing that conduct to restrict the future use of his land. Its discussion of locality also resisted a universal rule detached from circumstance. This is a richer inquiry than the maxim that the later arrival always loses, and a different inquiry from choosing whichever business has the larger receipts. A prescription rule changes the future claims that can be made upon land. It therefore changes the terms on which people build, enlarge, protect or neglect the spaces beside an established activity. The legal history matters to the economics because the starting right itself shapes the choices that precede the dispute.
Once the interference is a wrong, the remedy poses another question. An injunction gives the protected owner a power to require it to stop; damages put a judicial valuation on an injury. Neither description tells us, without more, whether the factory will install equipment, move, bargain, reduce production or close. Suppose, in an invented example, an annual precaution costs four hundred pounds and prevents six hundred pounds of harm. Counting both sides makes the precaution worthwhile. Whether it is taken depends on what the operator must pay or secure consent to do, how the injury is proved, and what enforcement costs. The arithmetic establishes a saving of two hundred pounds. It does not by itself establish a legal entitlement or show that the parties will reach the saving.
The smoke had crossed the boundary already. The judgment decided whose claim would follow it.
The distinction became explicit in New York's Boomer v Atlantic Cement in 1970. Dirt, smoke and vibration from a cement plant had been found to constitute a nuisance. The Court of Appeals did not erase that finding because stopping the plant would be expensive. It ordered an injunction that would be vacated upon payment of permanent damages to the plaintiffs, with the awards to be examined on remand. The remedy thus preserved the finding of wrong while permitting the interference to continue once its assessed permanent cost to these owners was paid. The judgment's reach was the private rights before the court; the majority expressly left public health agencies free to seek proper relief.
Permanent damages change the incentive after the cheque has cleared. If a payment settles these owners' future claims, a later improvement that benefits only them does not necessarily reduce the operator's liability any further. The majority thought the prospect of liability across the industry could encourage research into better control; the dissent feared that permitting an adjudged nuisance to continue after payment would remove the incentive to abate it. Justice Jasen would have delayed the injunction for eighteen months to allow time for a technological answer. These were competing judgments about a remedy's consequences, as well as about the neighbour's right. They should not be compressed into the assertion that the court had discovered and charged the exact marginal cost of each subsequent plume.
The diagram of social cost gains force from this history, but it must keep its own assumptions visible. Where the buyer's marginal benefit falls below the full marginal cost of another unit, producing that unit wastes value under the diagram's monetary measure. It does not follow that every pollutant should survive in some positive quantity. A poison with sufficiently large harm can warrant complete abatement; a safer process can preserve the product while removing its dangerous by-product. Nor does payment make the physical damage disappear. The word internalised describes whose calculation now includes it. The injured person may still endure it, and a court's award may cover a narrower set of interests than the community's losses.
Nuisance law's old question was how one person's use could stand beside another's protected enjoyment. Seriousness, locality, prescription and remedy gave that question its working form in these decisions. Economics adds an account of the opportunities each rule preserves or destroys, including the precautions a different allocation of responsibility might induce. It cannot make the choice of protected interests vanish into an entry in a ledger. The factory's saving is the neighbour's expense until some institution makes the connection count. In the next plate the sign changes: an activity sends a benefit across the same boundary, and the person who creates it may find that nobody is obliged to pay.