The Formation of Private EDOs
A lesson we draw from our 1945-1950 landscape may be that its most prominent aspect is the, all too fragile dominance of large central cities. We already understand through past comments that central cities saw themselves in some level of crisis. Obsolescence, decentralization (suburbanization), blight, pollution, and the need to modernize infrastructure to catch up with critical technological, transportation and industrial innovations of the past decade and a half too mention the most obvious set of problems needed to be confronted. As we learned in the last chapter, the business sector had picked up the baton throughout the thirties, but certainly in the period immediately preceding entry to the war. The public sector in the form of a new style of non-machine mayors armed with their progressive planners seemed relatively open to a 1950-s style public-private partnership-particularly in that resources were limited. But then Pearl Harbor was bombed.
Into the breach once again stepped business leaders and the private sector. Depending upon the city, the first task was usually to topple the decaying, neighborhood oriented, frequently corrupt and very incremental machines, bureaucratic hacks and their bosses. In these cases the precondition to deal with the urban crisis was to set up a new urban political structure with the will and the capacity to respond and implement reform. In other cities, where a Progressive business-led coalition had already “tossed the bums out” the need was to (1) prioritize the problems, (2) develop solutions, and (3) figure out how the city could pay for all this reform. Municipal planning, management and upgrading fiscal capacity were the effective preconditions in this type of central city.
Neither of these situations corresponded well to the nature of the business constituency which had formed in the 1940 years. The Urban Land crowd, real estate-based businesses and the Real Estate Board, were too narrow and self-serving to be sufficient to the tasks at hand. To be sure the “downtown” business community was still a necessary and vital element of any new business coalition, but a broader, more private sector, base had to be constructed to, if nothing else provides electoral muscle, administrative competence, and non public resources.
In particular, the “city fathers” (and mothers if they had them) had to step up to the plate. Real change required real power if it was to be achieved. As Teaford observes this mobilization of the private business community was not an out of the blue phenomenon. To the contrary, in the culture of the day this business involvement was expected and desired. Business involvement was viewed as absolute precondition to affect change. After all, a core dynamic of the urban experience in America has been described as Privatist.
But from the beginning of American urban settlement business leaders had expected municipal cooperation in the boosting of local fortunes, whether through aid in attracting railroad lines in the nineteenth century or support for harbor projects or world’s fairs in the twentieth century. Moreover, a sense of noblesse oblige and the desire for a good public image had traditionally encouraged business leaders to contribute money and energy to civic improvement schemes. City hall was expected to maintain a favorable business climate, and business chieftains were expected to raise the civic and cultural stature of the community[1]
What was needed in 1945, however, went far beyond this more traditional model of business-public partnership. On top of that, the structure of American capitalism had radically changed over the years.
Industry Concentration, a midwife for Progressivism’s birth and nanny for its adolescence, had been largely achieved by the 1920’s. The scale and size of many private corporations had grown to be at least regional, usually national, and in 1945 was looking abroad for opportunities. The United States, home to what would be the new reserve currency, the United Nations, and leader of the Free World was a/the global leader. The traditional urban hierarchy, the precise calculations of central place-market area analysis, while descriptive of an economic market area, did not account for the more political and social consequences of a new American corporate structure and leadership opportunities. There was a new style corporate leadership which resided in our central cities: cross-border elite.
Cross-border elites were something new to the American scene in 1945. Absorbed in the making of their industry oligopolies and maintaining these corporate behemoths in the challenging times of the Depression and Global War (indeed called to Washington to organize and operate the home front economy to wage that war), these elites had largely declined to participate in state and sub-state economic development to this point. Used to thinking about the “big picture” in Washington D.C., these cross-border business elites returned to their corporate headquarters in 1945-46–demobilized much like the American soldier. But you can’t keep cross-border elites down on the farm, once they have seen Washington D.C. Back in their home communities these new elites uncovered an urban crisis which required their involvement, and, of course, leadership. The urban crisis begged for their attention and these elites forged a vision lead their home communities out of the Wasteland[2] and into the Promised Land. Their vision for addressing that crisis, however, were far more bold and embracive than that of the Urban Land real estate crowd which had previously dominated their home town business politics to that point.
The corporate elites had the confidence, resources and the power to remake the big cities: as they had in the city beautiful years–they would simply build it anew and modern once again. They could recapture the urban refugees who fled to the peripheries of the central city and the mostly unincorporated areas which were fast becoming the suburbs. How? Through a more attractive and modern central city, with a prosperity restored sufficient to overcome the obvious poverty of the transition zones and by metropolitan planning, metropolitan authorities and service districts which could both finance and tie in administratively those areas which escaped physical recapture by the central city. In the minds of these elites, the central city was primary–the headquarters of the region.
A sick, grimy, rundown corporate headquarters was a visible indicator of a corporation in trouble. In this mindset, borders mattered little. Each border marked the limits of one small pool in which little elites swam, played and ate. These little elites in little ponds could be managed, some recruited, to advance the interests of the mega cross-border elites on whom they were either dependent on or deferential to for sustenance or opportunity. Progressivism, always a big tent with usually more than “three rings” underneath its’ roof, had encountered a new global transformation and had morphed its Privatist-Progressive ring to create yet, another version of Progressivism. All this new version of Privatist-Progressivism required to operationalized its vision were (1) a cross-border elite-led “Vault”-like EDO; (2) a workable public-private partnership which could supplement its vision with appropriate and specific skills and expertise; (3) and a federal (or if necessary, state) “sugar daddy” to pay for it all.
The power and perspective of this new corporate cross-border leadership had to be tapped–and in 1945 many of these elites wanted to be tapped to play in the game of urban revitalization. In fact in many instances it wanted to lead the public sector. In many ways, this new leadership fundamentally set the tone and the muscle behind the operations and prosperity of more regional and local firms–and the downtown real estate community as well. But if the new powerful corporate elites had to play and pay, they needed a structural base from which to launch their initiatives and staff the management of these initiatives.
The new role, increased power, and more complex set of initiatives required to confront crisis and restore central city prosperity required a more specialized economic development-oriented organization than existed in the chamber of commerce[3]. Certainly the Chamber would be part of the business coalition that would operate out of this new EDO, but the new EDO had to assemble and concentrate private power and, equally important, expertise, insight and resources and hurl these forces to solve priorities in a focused, sustained and competent manner.
Possibly the first of this new private EDO type was Pittsburgh’s Allegheny Conference found in basic form in 1943. Its board and membership grouped the who’s who of Pittsburgh’s corporate leadership–in particular Richard King Mellon (Mellon Bank). Participation in the organization was personal to the corporate leaders themselves, not their designees. Mellon’s power was both legendary and extended to Harrisburg, the Republican Party and to other numerous corporations on which he served as a board member, lender, or business partner. The other corporate leaders, perhaps in a reduced scale, offered identical relationships as well as judgment, access to expertise and resources of all kinds. If Pittsburgh had assembled a new type of economic development organization (EDO), it had also created a role model for other communities to latch onto for their salvation.
Over the next decade (one might keep in mind these organizations, composed of powerful fat cats, are like their feline counterparts, quite difficult to herd–the need for a business statesman to bridge egos, inattention and rivalries is imperative), big cities formally or informally assembled these EDOs. Boston’s “Vault” is often the name attached to such EDOs, but “the Vault” was, in fact a “Johnny comes lately” and it was very, very informal to the point of secrecy–exactly the opposite of the Allegheny Conference. In any case some noteworthy organizations that developed using the Allegheny Conference as their inspiration were: Baltimore (Greater Baltimore Committee founded by James Rouse), St Louis (Civic Progress Inc)[4], The Greater Philadelphia Movement, and Cleveland’s (Cleveland Development Foundation). All of these organizations (or their successors) survive today and remain major forces in their region’s economic development policy-making system. Over the next several decades many, probably most large cities-regions have embraced this model and since the 1990’s, in particular, this model has been adapted to advance regionalism in its various forms. Also, this model of EDO was copied by many smaller urban centers throughout the following years. Working to construct-facilitate some version of the EDO-type in a period of crisis has been a very common response of economic developers.
A second, more focused, type of private EDO also appeared during the immediate postwar period: the downtown, CBD, revitalization EDO. Often created by major downtown retailers and others from the Urban Land crowd, these EDOs (and some never incorporated and were therefore informal–usually operating out of the Chamber or the previously mentioned Allegheny Conference type, were dedicated to bringing back the CBD and combating decentralization and its effects on the downtown districts. Some examples of this type of EDO are: Chicago State Street Council (which actually was formed in 1927), Baltimore’s Committee for Downtown, Minneapolis Downtown Council, and Downtown in St Louis Inc.
Throughout the Northeast and Midwest, corporate chieftains, downtown merchants, and civic activists claiming to speak for a broad range of groups all agreed that the older central cities had to launch initiatives to overcome obsolescence and achieve rejuvenation. Through downtown business figures were to be disproportionately significant in the struggle for revival during the late 1940’s and the 1950’s, renewal schemes were not the product of small cabals of plutocratic overlords who foisted them on an unwilling public. A number of private groups were demanding action and …could prove feisty foes of public officials who dragged their feet.[6]
The CBD was an office and shopping district and CBDs were dominated by banks and department stores: this was the CBD’s Golden Era (Kate Smith’s “Silver Bells” hailed the CBD’s “city sidewalks” as the embodiment of Christmas[9]). Of the seventeen cities (urban areas) included in McDonald’s Northeast[10], New York, the most populated metropolitan area had 13+ million residents and Columbus (OH), the least populated (500,000). Blacks’ share of the population ranged from 23% of the urban area and 35% of the central city of Washington D.C. to 2% (urban area) and 5% (central city) of Boston. In most of the central cities, blacks constituted about 10-18% of the population.[11] The Great Migration, however, had not yet stopped. [7]
A third set of EDOs appearing on the scene were broader in their membership and constituency and were diverse in their goals and in their focus. In Philadelphia the Citizen’s Council on City Planning advocated mobilizing citizens to support city planning and its initiatives. Alongside it were other groups such as Association of Philadelphia Settlements, Central Labor Union, City Business Club, North Penn Community Council, NAACP, and the Inter-Racial Committee of Germantown[5]. All the larger cities and many smaller ones formed equivalent types of organizations which either dedicated the whole or part of their effort into economic development.
We, of course, may be incorrect but this period is the first instance we have found of widespread citizen participation and interest in economic development-related activities. Most of these organizations would not be classified as EDOs (some would, of course) but economic development policy-making systems, at least in the larger cities, became more robust, complex, representative and complicated in the period following 1945. If we are correct, this is an important and critical hallmark in the evolution of the profession and may well indicate the arrival of economic development as a significant policy area in the urban public policy system.
It is also very important to note that the composition of these new players varied widely from city to city–it was not just the usual suspects with the same type of interests, urging more or less similar proposals with relatively equal effectiveness across all cities. This lends considerable support to a major finding of this book: that cities differ in their making and the choices of economic development policy. Why these cities differ instead of simply drawing out the usual combinations of folk interested in, or affected by economic development, but instead elicit different cluster of issues, by different folks, in varying intensity and effectiveness is an important support that something deeper, a political culture, affects economic development policy-making and distinguishes among cities and policy jurisdictions in economic development policy-making and implementation.
These were the “golden years”, the “wonder bread years” of Keynesian economics, Global prosperity emanating from America’s new-found world leadership and the collapse (and subsequent economic miracle) of the post-war European industrial economies pumped up the American economy, providing jobs and opportunities. Inflation was low, income (especially discretionary income) of most white and blue collar workers was still rising (it would stagnate for the next fifty years beginning in 1960), and low unemployment with increased labor force participation by women meant that teen agers had jobs and families were prosperous. Purchasing power and discretionary income were growing and allowed many to lead “leave it to beaver” lives (not everybody, of course). But it would be fair to state more folk were caught up in economic growth in this era than perhaps ever before).
Footnotes
[1] Teaford, op. cit. p. 46.
[2] The reference here is to T.S. Eliot, the Wasteland (1922) –“Unreal City under the brown fog of a winter noon”. The Wasteland reflects our sense of how the central city had evolved at this time, and the spirit and the hope for its return to be led by a new elite. “Revive for a moment a broken Coriolanus. The boat responded Gaily to the hand expert with sail and oar. The sea was calm, your heart would have responded gaily, when invited, beating Obedient to controlling hands. I sat upon the shore, Fishing, with the arid plain behind me. Shall I at least set my lands in order”? London Bridge is falling down falling down falling down.”
[3] The Chamber’s chief strength, that it represented, more or less, the entire community business community was also a weakness if the powerful new generation of national and international corporate leaders were to participate. The programs of the traditional Chamber were many and varied, from tourism, to advocacy, to industrial promotion, to golf games and luncheon speakers. The new structures of economic development were, however, much more structures of corporate power and expertise applied to a particular city’s needs and problems. The ambition and the complexity, required to attack problems such as obsolescence, decentralization or infrastructure modernization, were on a scale vastly different than tourism and industrial promotion. For example, given Dillon’s Law the city often had not legal or structural power to even deal with some issues and it was clear at the outset that states, certainly, and most likely even the federal government would need be brought into the picture. The new private EDOs would, of necessity, be structures of power, expertise, and sustained coordination–not representation of diverse constituencies.
[4] The Civic Progress League was particularly encompassing of several functions. It controlled the United Fund (United Way). It also housed the Hospital Planning Commission, the Regional Industrial Development Corporation, and by the time of the Great Society (1966) it would exercise considerable influence over the city’s Model Cities Program and the Human Development Agency (St Louis poverty agency). See Dennis R. Judd, op. cit. p.113.
[5] Throughout all this section we have used Teaford extensively; in particular, pp. 44-54.
[6] Teaford, op. cit. p. 53.
[7] Robert J. Tilden, “Public Inducements of Industrial Location: A Lesson from Massachusetts” Maine Law Review, p. 14; see also David E. Pinsky, State Constitutional Limitations on Public Industrial Financing: A Historical and Economic Approach, University of Pennsylvania Law Review (1963), pp.. 277-284 and Columbia Law Review, Volume 59 (1959), pp- 619-623. A more recent legal review of gifts provisions in state constitutions cites that in 2011 forty six states had some form of a gift provision in their state constitution. See Nicholas J. Houpt, “Shopping for State Constitutions: Gift Clauses as Obstacles to State Encouragement of Carbon Sequestration”, Columbia Journal of Environmental Law, Volume 36, Number 2 p. 379ff–see footnote 117; see also, Richard Briffault, The Disfavored Constitution: State Fiscal Limits and State Constitutional Law, Rutgers Law Journal. Volume 34. 907 and Ralph L. Finlayson, State Constitutional Prohibitions Against Use of Public Financial Resources in Aid of Private Enterprises, Emerging Issues in State Constitutional Law, Volume 1 (1988).
[8] The “Back Bay Development Corporation” as Opinion of the Justices, 332 Mass 769, 126 N.E.2nd 795 (1955)
[9] But harbinger’s of unrecognized change as typified by “Miracle of 34th Street” (1947) in which the city apartment dwelling professionals (Macy’s employed) and their child (Natalie Wood) found the home of their dreams, brought to them by Kris Kringle–in the suburbs. In fact the 1700 sq. ft. house still exists (we are told) at 24 Derby Road in Port Washington NY.
Ron W. Coan 