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The industrial Big City: primeval soup of Big City economic development
In William Dean Howells’s novel, Silas Lapham observed upon returning from Civil War military service: “I found that I had got back to another world. The day of small things was past, and I don’t suppose it will ever come again in this country” (Howells, 1885, p. 26).
This chapter is all about change, the Age of Infrastructure and thinking “Big.” Topics such as urbanization, the industrial city, formation of municipal economic bases, changing urban physical landscape, municipal policy system and the Age of Infrastructure switch our attention from affairs external to cities and the “structures associated with first settlement,” to the internal dynamics and configuration of the emerging industrial urban centers that were post-Civil War and Gilded Age hallmarks.
While the last two chapters concentrated on the Early Republic transition from the colonial epoch, stressing population mobility and the emergence of the competitive urban hierarchy, this chapter touches on the staggered launch of industrialism’s driving sectors and industries, punching the clock on our industry/sector profit cycle and the incremental development of the jurisdictional economic base. Instead of a national scope, this chapter hunkers down on the Big northern and midwestern industrial cities created during the Gilded Age—our “Big Cities.” The term Big Cities is restricted to these early industrial age urban centers that were located in the Northeast, Mid-Atlantic and Midwest.
The Gilded Age was when a political/economic regional hegemony of northern and midwestern Civil War victors institutionalized themselves into political control of the nation. That the industrial city/immigration occurred mostly in the North and Midwest meant that those urban centers housed the headquarters, factories and cheap labor for the industrial revolution’s gazelle sectors. On top of a political hegemony, we add a Big Cities economic hegemony. The perception, if not the reality, that the other regions (the South and West) were little more than their colonies became widespread in those regions. The hegemony lasted for more than 100 years, until it crashed down in the 1970s.
Urbanization being the midwife of present-day contemporary economic development, the explosion in the size and economic vigor of northern and midwestern Big Cities was not mirrored across the nation. For the most part it was confined to the top cities of the hegemony, cities labeled throughout this history as “Big Cities.” From the perspective of economic development, a distinct and oft-times separate “style-path” developed in these big industrial cities. Over time that style-path crystallized into a “wing” of American economic development—a wing with its own history (legacy), strategies, tools and programs that were profoundly affected by their policy systems, jurisdictional economic bases and political cultures.
While cities in other regions often copied and imitated the Big City structures and strategies, they usually employed them in a different context, with different goals in mind. We will pick up that theme in Chapters 7 and 8. This chapter, and the two that follow, tell the Big City tale: a story of one wing in American economic development; a tale that not only set the tone for American economic development, but a wing that also dominated it for over a century—and still tries to in the twenty-first century.
SECTORS, PROFIT CYCLES, AGGLOMERATION, OLIGOPOLY AND NATIONAL MARKETS
This section focuses on the transition from a colonial/Early Republic to an industrial jurisdictional economic base. That transition period is important to our ED history in that, by its end in the 1880s or so, the first major EDO of our contemporary ED system—the chamber of commerce—appeared in most cities, regardless of size. Chambers and their ED strategies and programs dominated American ED through World War II. These transition years were the formative years of the chamber. If one believes in the “wave” model of American ED, then the origins of the first wave occur in this section.
Our overall position in this section is that, while aggregate statistics amply demonstrate the rise of industrial production and virtually every indicator confirms these as “growth” years, that characterization is misleading. Seen from the bottom up (jurisdictional economic base) they were best described as turbulent, complex, fragile and riven by constant disruption from a never-ending parade of new sectors, aggressively competing urban centers and an opportunistic shift from dominance in regional markets to national ones. In many ways, the central role of one sector, railroads, represented the greatest threat and opportunity for jurisdictional economic bases.
Otherwise, using our Chapter 1 model, the rise of so many new sectors and industries that grew from stage 1 to stage 3 in a generation or less; the constant pressure to merge or expand; to survive in a flood of aggressive competitors; to produce a product at a competitive price in a deflationary period with serious if periodic bouts of unemployment; and the almost absolute dependence on an increasingly concentrated railroad transportation system that could make or break the entire jurisdictional economic base. These suggest that defensiveness and insecurity triggered an instinctual sensitivity to capturing new sectors and attracting new firms, and concern with existing companies.
To the individual jurisdiction the emerging competitive urban hierarchy offered opportunities for greatness and profit or ghost town and bankruptcy. Grow or be left behind. At the same time the profit cycle means that existing firms were never static; the perils of concentration, commoditization and access to technology, markets and finance counterbalanced the availability of cheap but often skilled labor. By the end of the century the first gazelles of American industrialization were showing signs of late stage 3 and early stage 4 maturity. For those such as the steel industry that could impose “Pittsburgh Plus” pricing, the continental colonies subsidized Big City production—others turned to their Big City jurisdictions to ask for help.
Economic growth did not follow a “steady uniform pace.” Rapid growth followed the
Civil War; another boom occurred between 1897 and 1907. Major depressions, or Panics, occurred in 1873-78, 1882-85 and 1892-94. In the 35 years following the Civil War to the turn of the century, booms held sway for 11 years, panics about 10 or 11. Throughout this period, a long-term decline in average prices “masked real growth.” During the 1870s wholesale prices fell by one-third, reaching pre-Civil War levels by 1879. In the 15 years that followed, wholesale prices declined by another third and did not return to Civil War highs until 1910. Unemployment reached 10 percent for five years in the 1870s and six years in the 1890s (Gray and Peterson, 1974, pp. 271–3). The era witnessed a serious streak of deflation that put caps on wages/income. Deflation (1) almost certainly increased social/political tensions and (2) yet did not negatively affect production output—which is why this era is thought of as economically robust. Population growth/mobility and the huge number of stage 1 or 2 manufacturing firms played some role.
The turbulence and complexity is compounded by this history’s policy-making approach: Who makes ED policy during these years matters. Business elites, certainly in the nineteenth century, are the central players in ED policy-making. When we start the transition, small family-owned local/regional business partnerships dominate the jurisdictional economic base; when we finish the era, behemoth nationwide corporations, railroads and investment banks dominate a continental economy. A revolution occurred in business structures that separated owners from management. A professional corporate management elite came into existence. Ancillary professions (law, finance, accounting/audit, engineering and architecture/construction) developed.
With each increase in corporate size and scale of market, the jurisdictional business community/elites became ever more complex, less tied to any one jurisdiction and more guided by growth, profitability and a quest for efficiency that was compared in its rigor to science. In such a world, business elites were fragmented, mobile, career-focused— and were drawn from firms that were family owned (local moms and pops), to department store chains, branch or headquarters, real estate or manufacturing—or business-driven professionals that serve in national corporations. Despite this diversity, much of our present-day understanding of this period is subsumed in a few broadstroke expressions such as “boosterism.”
In the transition-era real world, however, jurisdictional business elites were as diversified and in flux as the businesses they worked for or owned. There were many opportunities for Progressive input into Privatist EDOs and jurisdictional policymaking. It would not be surprising that separate EDOs would develop to serve the interests of distinctive segments of the jurisdiction’s business community. That will be discussed in the next chapter, but in this section some insight is offered as to why and how these transformations played out at the jurisdictional level.
Agglomeration: Forming the Jurisdictional Economic Base
After 1800 the American economy slowly shifted from agriculture to an increasingly industrial base. Most associate industrialism with manufacturing; nearly every Big City developed some level of manufacturing during the Early Republic, and manufacturing firms were highly prized targets of state and local ED. From the get-go, however, each city developed distinctive combinations of sectors and industries. Most Big Cities also developed an agglomeration, a disproportionate number of firms in a single industry sector. Agglomerations in these years were young, vibrant and stage 2 affairs—centers of employment around a nexus of suppliers.
The early industrial powerhouses, however, were those sectors closely related to transportation. Railroads provided markets for steel, coal, iron and numerous metalbending firms. Railroads required capital and financing—and that spurred everything from banks to local stock markets. Shipping across markets spawned insurance and logistics firms (warehousing, stockyards and grain silos). The war stimulated great railroad expansion and its aftermath, consolidation—both had serious effects on jurisdictional economic base as some locations were more central than others. Market areas of firms with access to transportation expanded greatly.
The Civil War itself set growth in motion. Huge profits, inflated prices and government contracts spread disproportionately to some sectors. With the closing of the Mississippi to northern farm produce, midwestern agricultural exports moved along new routes. Chicago and Buffalo benefited enormously. Farm implements were in great demand. Pittsburgh, Troy and Philadelphia developed metalwork specialties for cannon, rifles, locomotives and metal to convert wooden ships to ironclads. Philadelphia erected 180 new factories in three years—becoming in the process the nation’s leader in manufacturing. With cotton unavailable, New England textiles switched to wool (for uniforms and blankets), and the newly invented sewing machine prompted shoe factories to spring up in these New England textile centers.
Safe locations near key resources spurred army and war goods production by existing firms, while inviting competitors to locate nearby: New Haven attracted six firearms and locks factories; Pittsburgh benefited from new iron and steel foundries for war-related goods. The federally owned Springfield (Massachusetts) armory and its St. Louis drugs laboratory both attracted smaller firms to open (McKelvey, 1963, pp. 21–2).
The dispersal/agglomeration of manufacturing sectors was often serendipitous: an innovating entrepreneur launched the startup in a particular city simply because that is where he lived, and the sector developed initially in that city. Rochester, New York provided an excellent example. The Erie Canal triggered a major flour-processing sector in Rochester, whose workers in turn supported clothing, shoemaking, brewing and woodworking facilities. Its population grew to 100,000 by 1885. In 1880 George Eastman—a local, largely self-taught, 26-year-old Rochester Savings Bank bookkeeper with a bright idea—quit his day job and opened the Eastman Dry Plate and Film Company. In 1885 the former bank teller got his first patent for a roll-holder device (so cameras could be smaller and cheaper); he sold his first camera, the Kodak, in 1888. Eastman pioneered advertising slogans—his being “you click the button, we do the rest.” By 1927 Eastman-Kodak was the largest firm in that industry sector.
Manufacturing oligarchies started in the 1890s.
The typewriter brought life to Ilion, New York, and new vigor to Syracuse; telephone factories clustered for a time at Boston and Chicago, but soon spread out; the cash register placed Dayton on the industrial map … Bicycle companies sprang up in a host of towns … but shortly after 1899 when the American Bicycle Company absorbed forty-eight of them; production was centered in ten plants at Springfield Illinois and Hartford, Connecticut. (McKelvey, 1963, p. 42) Finally, agglomeration was not restricted to our Big Cities. Second- and third-tier cities also developed strong core agglomerations.
[d]rawing on local technology, nearby resources, or the production of an agricultural hinterland, many smaller cities specialized in certain kinds of manufacturing—rubber in Akron, glass in Toledo, cash registers in Dayton, electrical products in Schenectady, fur hats in Danbury, brassware in Waterbury, silverware and jewelry in Providence, collars and cuffs in Troy, leather gloves in Gloversville, brewing in Milwaukee, flour milling in Minneapolis, farm machinery in Racine, meat packing in Kansas City and Omaha, cotton goods in Fall River and New Bedford, shoes in Lynn, Haverhill and Brockton, steel in Youngstown, Johnstown, Birmingham and Gary. Many of these cities also became regional marketing and financial centers, for industrial activity of any kind generally stimulated subsidiary industries. (Mohl, 1985, p. 60)
While most cities developed dominant manufacturing sectors, others, however, clustered around finance or hinterland assets. Finance sectors constituted New York City’s core; it developed into the nation’s financial capital. Des Moines, Iowa (Equitable Life Insurance Company) and Hartford developed into America’s insurance capitals. By 1880 there were 6500 plus banks with national, state or private charters. Several cities became regional banking/finance centers after the passage of the National Banking Act of 1864. Regional banking centers, however, were dependent on the investment and money capital banks headquartered in New York City. Both finance and transportation manifested an early and pronounced tendency to form an oligarchy—compatible with metropolitan decentralization of branch offices, but which centralized economic power and leadership in a very few headquarter cities.
Another pattern was cities whose economic base developed around natural resources/ extraction and processing. Eastern coal-mining cities of Hazelton, Scranton and Wilkes-Barre Pennsylvania, and coal/oil/gas towns surrounding Pittsburgh/Toledo are examples. In later decades, oil/gas transformed the cities of Texas (and other southwestern states) into national economic powerhouses. Absentee ownership, innovation in logistics, technological change and unstable pricing of their products were key factors affecting these natural resource-based jurisdictions.
One last thought. By 1890 the only Confederate city remaining in the top 25 cities was New Orleans, and it had dropped from 6th (1860) to 12th (1890); 22 of the nation’s 25 most populated cities in 1890 were located in the “industrial heartland”— the Northeast–Midwest regional hegemony. If one’s perspective is the nation as a whole, then the reader might keep in mind that other regions do not mirror this industrial age growth—or its physical/demographic landscape, or its economic development.
Railroads Lead the Way
Railroads were the automobile or semiconductor industry of the era. By that I mean they were the nineteenth-century “platform” sector that disrupted nearly every other sector in some way. Jurisdictional economies and, correspondingly, economic development reacted to them in so many ways that railroads deserve a mention. For example, the impact of Western transcontinental railroads on city formation is a well-worn tale, but railroads built cities in the East as well. These were the years when trunk lines, the backbone of our rail system, were installed by Vanderbilt, Hill, J. Edgar Thompson and John W. Garrett. Eastern cities in every state “bought” railroads to run through them: Rochester got three lines to run through its city limits, selling three separate $1 million dollar bonds to close the deals; Buffalo paid $1 million to get an additional line (McKelvey, 1963, pp. 24–5).
Railroad access to Ohio and points west mostly occurred during, and after, the Civil War:
Chicago’s period of vigorous railroad promotion ended in the sixties; St. Louis, after a late start, endeavored in the seventies to recoup lost ground. Toledo and Milwaukee had to take the initiative in building lines as did St. Paul … Cincinnati and Louisville competed to extend lines to Chattanooga and Nashville, then to Atlanta and Birmingham—doing their imitation of Sherman’s March to the Sea. Following in their wake were firms seeking expansion into new markets. (McKelvey, 1963, pp. 24–5)
Because of the 1840s’ gift and loan clauses, post-1850 “railroad economic development” exhibited a decided tendency toward municipal-level railroad-related projects. States either got out or minimized their role, leaving it to the cities and towns. Gone was the corporate charter; instead post-1850 railroad-related ED directly empowered the private railroad corporation itself. Those changes ensured infrastructure would be built, but the fiscal cost to local government was terrible. Typical was Kansas, where:
Cities and counties were not only granted broad authority to tax, spend, and borrow for locally determined purposes but also both to subscribe for stock in and issue bonds to railroad companies and to aid private enterprise. Local self-government became the engine for state development and for the delivery of public services … . Local debt mushroomed, and Kansas led the nation in municipal defaults in the late 1800’s. Seventy-seven localities defaulted between 1870 and 1905, one half of these being in defaults for borrowing on behalf of railroads and private enterprise. (Flentje and Aistrup, 2010, pp. 152–3)
After 1900 Kansas state government corrected for the extremes caused by its decentralization of powers to local governments.
In any case, transportation was yet another sector around which individual cities built their economic base. Being a transportation hub meant that other industries/sectors could locate in the metropolitan area. Buffalo, for instance, became the transshipment capital of the Great Lakes, the nation’s second largest port and a top railroad hub. Its pioneering innovation of grain mills allowed for the storage of midwestern agricultural produce arriving by ship and stored until railroads shipped it to Eastern cities. Chicago, St. Louis, New Orleans and, of course, New York City lived off their port facilities and the transportation nexus connecting to them.
Railroads after 1850 developed into our “first modern business enterprise” (Chandler Jr., 1977, p. 9). Transportation, because of its inherent characteristics, moved quickly through stages and evolved into a Markusen oligarchy.
The evolution of the nation’s first modern business enterprise [railroads]—as well as the first modern managerial class—falls into two distinct chronological periods … The first period extended from the beginning of the railroad boom in the late 1840s to the coming of the economic depression of the 1870s. It was a period of almost continuous growth of the network … The second period of American railroad history, extending from the Depression of the 1870s to the prosperous first years of the new century, was one of competition and consolidation [oligarchy-formation]. (Chandler Jr., 1977, p. 88)
The story of the great “robber barons” is mostly a tale of the Great Railroad Cartels. The first cartel was assembled in 1874 at Saratoga Springs New York by the presidents of three major trunk line railroads. Others followed. Resisting cartels, one can see the rise of the western state Populist Movement and, in later years, a national Progressive Movement. These railroad cartels—epitomized by the Northern Securities (Railroad) Company (Trust) of James J. Hill and Edward Harriman—prompted Teddy Roosevelt to begin his career as “trust-buster” in 1904. Strikes, monopolies and rate-setting have accordingly dominated the history books. Less noticed is that the owners and managers of other industries and sectors suffered from railroad concentration, as did jurisdictions from which they operated. Non-railroad sectors/industries opposed railroad concentration and led the opposition to it—indeed these managers and owners provided the muscle to the Progressive Movement that followed.
Managerial capitalism in sectors other than rail—sectors such as iron, coal, oil gas, steel and durable and non-durable manufacturing; production and distribution of perishable products; and, most importantly, “middle management” (salesmen, accountants/bookkeepers, supervisors, department heads)—danced to their own music. Middle management and professionals became the yeomen of the Progressive Movement, of scientific management, the drivers for structural reforms in American local government; advocates for municipal home rule, civil service, budgeting and planning. Middle managers cast middle-class votes against political machines, moved to the suburbs and resisted central city annexation.
Top managers, on the other hand, formed/led the boards of trade, real estate exchanges and merchant associations. Resisting railroad cartels, they created port authorities. They fought unions. Top managers advocated for the Chicago Exposition and future “City Beautiful,” not to mention the city manager form of government. Top managers provided the inspiration and muscle to launch America’s first jurisdictional economic development organizations and initiatives. And the owners? They became our new “corporate elite”—the members of the Civic Reform Clubs, the pre-1900 chambers of commerce and the post-1910 municipal research bureaus. In these years, three critically important segments of the business community came to life from the primeval soup of the Gilded Age and formed the core of the jurisdictional economic base and policy system: (1) owners, (2) upper management and (3) the middle management/ professions of the new corporations.
In this dynamic atmosphere it was easy to miss the rise of yet another segment of the business community—composed of firms firmly anchored in the jurisdiction (local firms). Headquarter firms, modern corporate retail (catalog/department stores/ franchises/specialty retail), banks, newspapers, hospitals, utilities, universities and the always infamous real estate-based firms also joined the merchant associations and, in later years, the chambers. Almost invisible, the thousands of small business, the moms and pops that ethnic groups formed, provided personal and convenience services, enhancing societal mobility and jurisdictional quality of life. While sharing a private business perspective, local firms were not monolithic in culture, work experiences or policy priorities—and were probably more inward-looking than their capital mobile managerial counterparts. They viewed local politics differently, and political machines represented opportunity in exchange for tolerating a “wee bit of honest graft and seizing opportunities.” In these years, this fourth segment of the business community also flourished.
GROWTH AND INFRASTRUCTURE: MIDWIVES OF BIG CITY ECONOMIC DEVELOPMENT
The industrial city grew spectacularly during the Gilded Age, fueled by population growth from farm to city and immigration. There were 31.5 million Americans in 1860, and 76.2 million in 1900 (a 142 percent increase). Lots of immigrants piled into America’s entry ports: between 1850 and 1860 nearly 2.6 million entered; and nearly 5 million (1880–90) and 3.7 million in the 1890s. From 1850 to 1900 the number of people living in incorporated municipalities greater than 2500 rose from 6.6 million to 44.6 million—from nearly 20 percent of the population to almost 46 percent (Glaab and Brown, 1983, p. 112).
Say it another way: In 1860 slightly over 6.1 million Americans lived in urban areas; by 1870 slightly less than 10 million—nearly 60 percent growth during the Civil War decade. In 1880 a little over 28 percent of the American populace lived in cities; by 1890 it was 35 percent; and by 1900 almost 40 percent, more than 30 million, lived in American cities—a 300 percent increase in 30 years. America increased by 142 percent during the Gilded Age, but urban America grew by 300 percent. Under such pressure something had to give. Cities expanded outward—they pushed out their periphery and city boundaries. Given the lack of municipal public governmental capacity in this era, most ED, especially infrastructure, required heavy doses of private sector involvement.
An important Chapter 3 topic, infrastructure and hybrid EDOs, will be continued within our Big City discussion. The nineteenth century as a whole can be considered the Big City Age of Infrastructure, and nineteenth-century infrastructure, as detailed in the previous chapter, is dependent on devising an effective public–private partnership— hence the need for a hybrid EDO (HEDO). An obvious consequence of immigration and migration was the demands they placed on infrastructure. Water came first, and eventually (post-1890) sewers; but that was just the tip of the iceberg. The separation of work from residence and the obviously inevitable extension of neighborhoods across city boundaries created yet another dimension to the infrastructure crisis.
Transportation infrastructure—which ranged from horse-drawn omnibus to subway—was constantly in flux, and will be treated separately. A case study of Boston’s and New York’s subway race will detail how transportation infrastructure ED policy-making was made; who was involved; and how the fight for ED tools to do the job was critical. Later, shortly after the Gilded Age, new infrastructures (gas streetlights, electricity and the telephone) will enter, and complicate the picture immensely. These later infrastructure forms will be briefly introduced in the next section, but described more in a later chapter. The final infrastructure topic will be the municipal franchise, which was quite prominent in streetcars (and subways) and was the most refined, and hated, HEBO of the Gilded Age. Franchises became a platform for either regulated private utilities or municipal/regional public ownership during the twentieth century. Indeed, franchise elimination became a central plank of Progressive Movement mayors (discussed in the next chapter).
Gilded Age Infrastructure
Water (distribution) was the earliest (Early Republic) infrastructure. Since ancient times access to water was an urban prerequisite. As the American industrial city rapidly expanded, however, water distribution developed into a crisis. Potable water was one thing; water for manufacture and putting out fires another. Gilded Age cities soon exhausted local water sources. Finding water meant going miles downstream, incurring incredible complexity/expense in getting it to the city. New York City tunneled 30 miles out to the Croton reservoirs.
Until the Gilded Age most municipal water systems were private—and very much unloved by consumers. Service, quality and cost were the chief concerns. The underlying reasons behind municipal ownership, however, were not cheap rates, but the necessity of having an adequate and predictable water supply for fire protection and the need to reliably filter water to avoid disease. As those needs became increasingly intense, municipal, rather than private, ownership was preferred. A disastrous fire or a horrible epidemic was usually all it took to overcome any fear of tax increases. Municipal-owned, water-related infrastructure was installed in two bursts: after the Civil War to early the 1870s; and after 1890, when yellow fever and typhoid epidemics meant that expensive filtration and sewers were also needed.
After the Civil War, municipalities gravitated toward publicly owned water systems. Generally, a water board or commission was established—a forerunner of today’s public authority. The municipal water board/commission is considered in this history as a more public version of an HEDO. Governance of the entity was predominantly private (political machines were always trying to butt in, however), and staff (mostly civil engineers) were professional even by modern standards. Planning, incorporation of new technologies and a measure of public accountability became associated with these HEDOs. Later in this chapter we will describe how they affected, and in turn were affected by, Gilded Age suburbanization. In the next chapters readers will discover that these HEDOs incubated the first blossoms of public economic development as a profession. Dominated by civil engineers, their approach to ED was different from HEDOs dominated by architects and landscape designers associated by the Parks Movement. In short, they may not feature much in this section, but fully expect to hear more about ED-related boards/commissions in the future.
City ownership of water facilities, however, led to a fiscal disaster. City waterworks construction in Milwaukee, Pittsburgh, Baltimore and Cleveland, and street improvements and sewerage/water in Boston, led to skyrocketing municipal debt levels. Combined with the construction of the first municipal parks systems (e.g. NYC’s Central Park, Philadelphia’s Fairmont Park and Chicago’s park district’s acquisition of land), city debt obligations exploded and cities plummeted into fiscal crisis.
Between 1868 and 1873, the net bonded debt of New York City tripled, between 1867 and 1871 the bonded indebtedness of Chicago likewise increased three-fold; Boston experienced a tripling of its municipal debt during the years 1868 and 1874; Cincinnati bonded obligations rose five-fold between 1868 and 1876; Cleveland’s net debt soared 1,200 percent during the decade 1867 to 1877 … Combined debt to twenty cities having 100,000 or more population increased 176 percent from 1866 to 1876. (Teaford, 1984, p. 285)
Bankruptcies, serious reductions in property assessments and sustained tax revenue reductions followed (in Chicago’s case by one-third). Pittsburgh defaulted (1877) and Memphis defaulted twice (1873 and 1878), becoming the poster child of municipal collapse. Its municipal charters suspended, the state ran the city as a state taxing district.
The deed had been done, though. Municipal ownership of water-related infrastructure was set in place: “By 1897 only 9 of the 50 largest cities, and only 42 of the 142 cities with a population of between 30,000 and 100,000 had privately-owned waterworks. In 1909 70 percent of the cities over 30,000 owned their own plants” (Griffith, 1974, p. 180). Municipal debt structures imploded in the 1873 Panic, a Panic that continued through 1879. After 1880, however, Big Cities—always on the edge of bankruptcy aggravated by ownership of the water infrastructure—were reluctant to further expand municipal infrastructure ownership. This was the behind the scenes decision to employ HEBOs such as the franchise wherever possible to avoid direct municipal expenses, excessive debt burdens and operational liabilities.
But, reluctant or not, municipalities continued with previously established municipal ownerships using boards and commissions for infrastructure such as streets and bridges. At its start, the iconic landmark of the period, Brooklyn Bridge, was managed by a private company backed by municipal funds. Midway it was taken over by Brooklyn and New York, and converted into an independent commission with a board appointed by the mayors and comptrollers of the two cities. Its completion (1883) prompted another herd imitation of municipal bridge ownership. By the turn of the century, streets and bridges were also municipal concerns, with the result similar to water-related infrastructure: higher indebtedness and operating costs.
Gas and electricity were next; they were necessary to provide street lighting. Street lighting was associated with crime reduction, and cities were often prodded into providing it. Previously, central business district (CBD) business was forced into private contracts with a street lighting company. With the advent of electricity in the 1890s, street lighting got complicated. The size of the city was an important factor as scale reduced cost of service. Smaller cities faced prohibitive costs that inhibited private firms from effectively competing, and so smaller cities tended to build municipal power-generation facilities for street lighting. Larger cities usually retained energy services provided by private companies.
Until 1895 only two large cities had municipally owned gas and electric plants— Chicago and Pittsburgh. In that year, Detroit, under Mayor Pingree, started construction on its municipally owned plant. Public ownership of utilities after that became a major Progressive issue. Between 1876 and 1893 the telephone was a federally (interstate) regulated Bell Telephone patent monopoly, and Alexander Graham Bell could license local companies—making enormous profit. When patents expired in 1893, over 1,000 independent telephone companies, financed mostly by local capital, sprang up over the next four years. Rates declined by nearly 50 percent, and telephone use dramatically increased (Griffith, 1974, p. 184).
Transportation Innovation
Colonial and Early Republic cities were “walking cities.” A walking (ok, biking) city is a modern city planner’s heaven: dense (an estimated 170 people per acre in 1840); compacted into diverse multi-class, tightly packed neighborhoods. As late as 1850 Philadelphia extended out only 2 miles. But there were downsides to this heaven on earth. There was horse (and people) “do-do,” disease, dust and mud, and surprisingly lots of congestion. Separation of work from residence had started long before the Civil War, and workers simply couldn’t get downtown to their jobs.
The horse-drawn omnibus, originating in France, first appeared in New York City in 1829. Philadelphia operated one in 1831, Boston in 1835 and Baltimore in 1844. The omnibus—a covered wagon with seats (sort of an old Volkswagen bus)—operated on a fixed route, carried 12–20 passengers driven by two horses (sorry Mayor de Blasio) and was somewhat affordable; “By the 1850s, omnibus service had become a regular feature of urban life in New York, Boston, Brooklyn, Philadelphia, Washington, Baltimore, Pittsburgh, Chicago and [the ever-alluring “Omnibus of Desire” operating] in New Orleans” (Mohl, 1985, pp. 30–31). Hailed as revolutionary, the horse-car railway (a slightly more affordable horse-powered omnibus on iron rails) replaced the omnibus. By the 1880s, 525 horse-car lines operated in 300 American cities— extending the city periphery as far as 5 miles out.
The omnibus facilitated middle- and upper-class residential movement to the city periphery. Separation of classes and the ceaseless push to periphery areas had commenced. Left behind were beat-up, old working and immigrant neighborhoods— the ethnic “wards” of political machines.
Of more impact than the omnibus in the time-honored task of separating rich from poor was the commuter railroad. The commuter railroad (running to nearby suburbs) appeared simultaneously with the omnibus but was more expensive. By mid-century about 20 percent of Boston’s business people used commuter railroads for the 10–15-mile daily journey to work (Mohl, 1985, p. 30). Between the omnibus and the commuter railroad, the drive to the city periphery/suburbs started much earlier than usually thought.
After a successful experiment in San Francisco by Andrew S. Hallidie (1873) the nation’s cities increasingly adopted the steam-powered cable car. Some 626 miles of cable car track served 20 cities by the mid-1890s. In 1888 Frank Sprague (an unhappy associate of Edison) successfully converted Richmond’s horse-car lines to electricity, and we officially entered the streetcar age. Sprague made a fortune through the sale/installation of his transportation equipment. Within five years of Richmond’s opening, 850 systems were in operation, with lines totaling 10,000 miles (Glaab and Brown, 1983, p. 160). Most Big Cities developed an incredible number of competing routes: for example Philadelphia 39, New York City 19, Pittsburgh 24, St. Louis 19, San Francisco 16; and even small cities like Grand Rapids Michigan had 4 (Griffith, 1974, p. 183). By 1902, 97 percent of urban transit mileage was electrified and 2 billion passengers rode on streetcars.
Streetcar lines were loss-leaders, or “the razor” that opened the periphery to subdivisions. Transportation company profits (and taxes for municipalities) came from residential/commercial development built alongside or at the end of the line. Such estate development was a gold mine. As the middle class moved to the periphery, an unanticipated new sector arose to meet the demand for recreation: amusement parks. So trolley/streetcar companies built amusement parks. Within 25 years five disruptive/ expensive transportation innovations were installed in our Big Cities, digging up streets and pavements each time, leaving behind a tangle of overhead wires and a bewildering morass of underground pipes and wires (Mohl, 1985, pp. 32–5). To rise above this tangle, the elevated (El) made its appearance, first in New York City in 1878. However, the El solved as many problems as it created. Small wonder streetcars were the most disruptive urban political issue in the Progressive Age. For example, in 1907 New York City: “in twenty-seven days there had been 5,500 accidents on street railways … 42 people were killed outright, 10 skulls fractured, 10 limbs amputated” (Glaab, 1983, p. 161).
But we are still not finished with transportation innovation. During the last decade of the Gilded Age, the subway made its appearance. Streetcars were disruptive, ugly, unsafe, congested and grossly uncomfortable, making street-level life unbearable. Up or under were alternatives; cities tried both—at the same time in the same city. Boston and New York were the first in America to attempt the subway (underground)—London, Paris and Berlin already had them). To learn from this saga we tell the story of “an unlikely pair of brothers from a tiny town in Central Massachusetts [who] came from a long line of Puritans” (Most, 2014, p. 2): the brothers Henry and William Whitney.
The Great Subway Race
Henry, the elder brother, moved to Boston, forging its premier streetcar and residential development empire. By 1890 an estimated 114 million rode electrified streetcars of his West End Street Railway Company. But Henry wanted more—he wanted to go underground. In 1887 he had proposed to the new Democrat Mayor Matthews at the annual meeting of the Boston Real Estate Exchange that his company be given “the main avenues wide streets; give us room for the development of transportation interests.” But Matthews wanted something different:
It was not … the job of the West End Street Railway Company to dictate the course of the city, to decide which neighborhoods got trolley stops or wider streets and which did not, or to determine how far into the suburbs the transit lines went … As their mayor he pledged that it was time to take back the streets from the corporations that rule them and return control to the people. (Most, 2014, pp. 190–91)
Caught between a Privatist rock and a Progressive hard place the subway had little future in Boston. In New York, however, newly elected Republican Mayor Hewitt had (in 1888) proposed that the city would pay for the subway construction built by and leased to private enterprise so long as they would operate/maintain the system and pay interest on the bonds. The city would not go bankrupt in building and operating the system—and the private sector would run it and make such profits until the line, upon payment of the bonds, would convert to city ownership. There was a fly in the ointment, however: New York City’s largest streetcar owner and potential Democratic presidential candidate, William Whitney (the other brother), was opposed. And so the race to build America’s first subway commenced.
Boston surprisingly got digging “firstest with the mostest.” Henry made a critical decision which made the subway technically possible—he partnered with Frank Sprague and converted incrementally his West End Railway to electric-powered cable. That decision uncomplicated the construction and cost of subway construction, and made the ride more comfortable for passengers. While both accepted electrification, Mayor Matthews and Henry Whitney could not agree on who should build and where to build. Henry, in frustration, retired from his business in the fall of 1893, taking the West End Railway Company out of the subway business and leaving subway construction bidding open to the lowest bid. So, in 1894, Mayor Matthews, having gotten his way, secured approval from the Massachusetts legislature for the city to own and build a subway and to lease its operation/debt repayment. An 1894 referendum approved municipal bond issuance (by only 1250 votes), and construction commenced in March 1895.
On September 1, 1897 the first subway train, Car 1752, powered by Sprague’s electric system, rolled out loaded with invited dignitaries for America’s first subway grand opening (Mayor Josiah Quincy IV ignored the invitation). The Tremont Street Subway (the first section of the “T”’s Green Line) opened for business. The race was over. Boston won. However the more interesting story was the New York City subway.
Mayor Hewitt’s 1887 proposal for subway municipal ownership got off to a good start as the New York City Chamber and the Real Estate Exchange quickly endorsed it. The Times opposed it, and so did the voters—they tossed Hewitt out of office in the next election. Satisfying Dillon’s Law (see Chapter 3), the proposal was signed into law by the state in 1891 as the Rapid Transit Act. Recognizing the continuing power of Tammany Hall, that legislation required the private sector to finance construction and system operation (to keep Tammany out of subways). The 1891 legislation led to the formation of the Transit Commission chaired by piano-maker William Steinway. The Commission was entrusted with design and routes, and to bid out its construction. William Parsons (later of Parsons Brinckerhoff fame) was appointed the Commission’s Deputy Chief Engineer.
Steinway poured his heart and soul into making the subway work—but William Whitney and other streetcar owners were not interested. They were investing in the elevated system—subways only complicated matters. The Panic of 1893 killed any hope of private financing, and so New York City, as far as the subway was concerned, seemed in stalemate. But in 1890 London opened a new and improved electrically powered subway, and it appeared that 1894 Boston was on the verge of subway approval and financing—so New York City’s urban competitive juices got its elites re-motivated. Although the NYC 1890 Steinway Commission was dead in its tracks, former Mayor Hewitt, also a former NYC chamber president, convinced the chamber to take over subway advocacy. The NYC chamber formed a committee and resuscitated Hewitt’s hybrid EDO (public financing, private construction and operation).
Believing that city government (and Tammany) would frustrate the project, the chamber secured city authorization to form an independent (self-perpetuating) Subway Commission, with six of the eight members (including the chamber president) being chamber leaders. The Tammany-controlled state legislature attempted to assert control over the Commission, but the chamber rebuffed its efforts. The Chamber Commission drafted and submitted a bill (1894) to the state legislature which was approved/signed by the governor in three months. The state legislature’s 1894 Rapid Transit Act embraced Hewitt’s hybrid EDO, but added referendum approval before any bond issuance. The referendum endorsed the chamber’s plan by three to one. The Subway Commission quickly issued public bonds and subcontracted construction and contract oversight to the chamber itself (Mead, 2014, pp. 144–5; Teaford, 1984, pp. 190–91).
So, by 1895 both cities had approved a similar HEDO, adopted similar technologies, developed a route system and approved municipal financing. The race was virtually a tie. In March 1895 Boston broke ground; New York City broke ground the same month—but five years later in 1900. What happened?
New York City downtown property owners had to concur on routes through downtown areas; they refused, and the state Supreme Court affirmed the action. Crushed, the Subway Commission was put on hold, Parsons, went to China, the United States entered the Spanish–American War—and the New York subway was stopped in its tracks. Enter William Whitney.
Whitney (with Jay Gould) controlled the New York City transportation system, and nearly all light, heating and power lines underneath his routes through another organization, the New York Gas and Light Company. The tangled mess that was streetcar transportation/energy/light franchises was untenable—and Whitney knew it. In his frustration he asked his brother Henry what he would do. The reply was to hire Henry’s chief engineer and electrify and build a subway—all of which William did. He proposed a plan to the city in which he would essentially, own and operate the line but pay the municipal debt incurred to construct it. In the Progressive Era, that monopoliststyle control would never fly, especially in a city that had seen Henry George run for mayor. In 1899, once again stalemate.
The city called for construction bids under the 1894 financing plan, but only two bids were received. The construction firm closest to Tammany was approved; it secured financing from a wealthy investor, August Belmont Jr., who formed an operating company: the Interborough Rapid Transit Company (IRT). The IRT, however, found no bankers willing participate, even though it had secure municipal financing; the IRT also found when it went to the New York state legislature for a corporate charter to operate a subway line that state legislative support was not forthcoming. Belmont solved both problems in a secret meeting with the person responsible: William Whitney. Weeks later, William Parson’s pickax broke ground for construction. On October 27, 1904 the subway officially opened.
The Franchise as Hybrid EDO
The franchise represented an early form of privatization; or, if one prefers, the franchise was an early form of utility regulation. To me the franchise is another attempt to develop a hybrid private/public EDO necessary to deal with Gilded Age, Big City streetcar, electric or utility-like infrastructure. Franchises were granted chiefly by municipalities, but municipalities needed state authorization to do so. Not infrequently the state would require lucrative franchises to secure a corporate charter, in addition to the municipal franchise. The reasons for this bipolar structure are clear only to the truly cynical. Franchise politics was a truly messy affair.
The franchise was either exclusive (sole-sourced) or competitive, tending to the former over the years. The franchise extended for a specified term of years, requiring periodic renegotiation, with new taxes, regulations, rates and “donations.” Extra provisions such as fire hydrants or street paving and upgrading of pipes were common. Books could be inspected and stock issuance regulated because issues of stock speculation and bribery appeared early on. Rates and their burden on the urban poor and streetcar riders were only two of many very visible issues associated with franchises; safety and (in earlier years) animal cruelty were also issues. Cities received annual payments, similar to today’s payment in lieu of taxes. Property was assessed at negotiated levels. Franchises, often characterized in academic literature as corporate giveaways, were much more complicated in real life. By the turn of the century rates were about a nickel. The real issues were congestion; no transfers between competing lines; safety and comfort; slowness and just plain crappy service—like riding an airplane today.
The Gilded Age decision to subcontract infrastructure to private franchises has been controversial; it generated a great deal of concern at the time. I argue that transportation infrastructure, from the municipal perspective, was an unsuitable infrastructure for public ownership and municipal investment. Privatization of any infrastructure became the foremost ED-related issue of the Gilded Age. In that Gilded Age transportation and power infrastructure—with its potential for disruptive innovation; its centrality to urban residents and lifestyles which made it politically sensitive; and its vulnerability to corruption—required developing a sophisticated HEDO that met the legal constraints associated with “gift clauses.” Municipal (and state) government had yet to develop either bureaucratic capacity or effective governance sufficient to the task.
Infrastructure, once installed, is a service that has to be (1) managed, (2) cost effective, (3) quality controlled and (4) indefinitely supplied to businesses, neighborhoods and even to adjacent unincorporated/incorporated areas. The larger the geography, the lower the rates and the higher the debt level generated. Someone has to pump and filter water; someone has to generate and maintain the distribution of electricity; and someone has to ensure trains run on time. Putting the pipe in the ground or digging the subway tunnel is only the first step. This requires that anybody attempting to install and operate infrastructure had better know what they are doing and have access to long-term financing/debt issuance. Under these constraints, municipal ownership of these infrastructures was not a foregone conclusion. Indeed, one municipality’s efforts to own the gas plant powering its street lights degenerated into the patronage base for Philadelphia’s Gas Trust Gang under James McManes. Ironically, to break up that political machine the infamous gas plant was returned to private ownership in 1894.
Franchise horror stories occurred in every city. The first street railway franchises were apparently in New York City (1851). Fares were set at five cents and the first boilerplate for a franchise agreement was drafted. It was vague and incomplete, and was improved upon by each new city entering into a franchise over the next 50 years. The terms of agreement for those early franchises were 50–100 years; Albany would grant a franchise for 1000 years, which exceeded Buffalo, whose term was 999 years (almost as bad as Chicago’s present-day parking meter franchise). Gas lighting started in 1816 Baltimore, and by the 1820s cities issued franchises to private firms for that. When electrification arrived in the 1880s, cities redrafted gas/street light franchises to accommodate it. Even the Brooklyn Bridge cable streetcar railway, originally owned and managed by New York City and Brooklyn, was transformed into a franchise in 1889 (Glaab, 1983, pp. 189–92). Cities were saved from these horrible early franchises after the 1890s when franchise companies consolidated (or went bankrupt) to achieve efficiencies of scale and to take advantage of new, expensive and constant innovation. Whatever the corruption and inefficiency franchises involved, the tradeoff was that urban residents got some of the best Gilded Age infrastructure the world had to offer (Teaford, 1984).
By the late 1870s union-backed candidates won elections to city legislatures; they captured the mayor’s office in Scranton, Utica, Birmingham and Toledo. In a dramatic departure from the politics associated with businessman mayors, government ownership of the urban infrastructure became more common. In 1881 the Mechanics Assembly of San Francisco pressed for gas, water and street-sweeping, and in 1886 no less than Henry George himself was invited to run for New York City’s mayor on a platform of public ownership of its mass transit (Radford, 2013, p. 74). Most of these more “radical” demands carried over into decades beyond this chapter’s focus, but in 1894 New York City voters approved in a referendum the city’s ownership and operation of a subway; in the same year Detroit voters approved a street railway; in 1902 Seattle voters approved a bond issue for a municipal-owned power plant; and in the same year Chicago voters approved owning its mass transit system by four to one (Radford, 2013, p. 74).
The transition from private franchise to public ownership may sound good to many, but in the years after the Civil War at least five radically different modes of urban transit were employed in our Big Cities—and the expense and investment was made largely by private franchises. The operation of these modes of transportation, whatever their deficiencies, was also in private hands—no small matter given the lack of bureaucratic capacity and the weak, often corrupt governance of Gilded Age Big Cities. With considerable irony, the subway, bus or electric streetcar transferred into public hands and onto government budgets simultaneously with the arrival of newer forms of transit innovation (car, plane, truck and drone). The heritage of public bus lines and metro subways/elevated rail systems confronting our cities today hints that, whatever its messiness, the franchise may have served Gilded Age public purposes better than we like to admit.
GROWTH AND BIG CITY PHYSICAL LANDSCAPE: PLACES FOR PLACE-BASED ECONOMIC DEVELOPERS
Sub-state ED is, this history argues, at its core, place based. During these years, the key “places” that consume contemporary ED develop into recognizable forms: the downtown (CBD) neighborhoods (and subdivisions) and autonomous suburbs. They are the creatures of growth and a natural tendency of uses and functions to sort themselves out geographically. Zoning did not exist in the years in focus; every Big City was like Houston today. The diversity of mixed uses and housing styles that Jane Jacobs (1961) speaks lovingly about, however, also developed in this era. Kind of contradictory, you mutter—I agree. Such is history.
Suburbs and the tendency to “sprawl” across boundaries and urban peripheries also is apparent very early in the history of Big Cities. Mostly this is a function of pure, simple population growth in an age when building upward was limited to about four stories. But residential sorting out of classes also is evident early on. The affluent fled long before the Great Migration and the federal government got involved. So did the middle and upper working classes. Some version of Jackson’s “American Dream” (Jackson, 1985) likely existed even back then. Why they became “autonomous,” however, may or may not have been instinctive. In the next chapters, it will even be evident that the glory and inevitability of what we now call “central cities” will be questioned by the end of the Gilded Age.
Contemporary ED often speaks of “functions” that geographies can perform. This is no doubt correct as far as it goes. Structures and geographies can perform functions— but in our history they come and go, rise and fall, ebb and flow. They have never seemed as fixed. This is especially true of the downtown. Downtown development and downtown revitalization seem to be flip sides of the same coin. By the first decade of the nineteenth century, a future chapter will describe the first major nationwide movement to modernize and refunction the downtown that emerges in this chapter. CBDs seem more a process than a fixed set of buildings performing a cast-in-stone set of functions. That dubious truth, however, will require a century or better before it can be argued with some plausibility.
The Birth of the Big City CBD
The contemporary central business district (CBD, downtown) was an offspring of the Gilded Age. Serving initially as government center and marketplace, downtown became the metro area’s transportation hub—and its skyline the symbolic capitol. Finance, advertising, newspapers, offices, entertainment and retail gravitated to this strategic area—brimming with huddled masses and the oldest buildings. In the Gilded Age the confusing labyrinth of streets and alleys was replaced by grandiose rail stations (Grand Central Station, 1871), corporate headquarters and working waterfronts full of factories, warehouses and train tracks. The CBD concentrated the raw economic and political power of Gilded Age metropolitan elites.
Gilded Age CBDs developed into a magnet for workers and shoppers alike, becoming the visible heart of the new industrial city (Gruen, 1964). The CBD served as “commons” for all neighborhoods, and, like the flag, the symbol of metropolitan civic pride and optimism. Retail was the traffic generator. Innovations in retail first appeared in the downtown: first the chain, then the department store created vitality and prosperity. The first Walmart style corporation, the Great Atlantic & Pacific Tea Company (A&P to the oldsters) opened in 1864 New York—spreading quickly to
CBDs of all cities regardless of size. Woolworth and “5&10” Cent stores (sort of Five Below or Dollar General) opened in 1879 Lancaster Pennsylvania. Grocery stores and mail-order stores followed. The first American franchise, Singer sewing machine stores (the Apple of its day), started in 1851. General Motors (GM) car dealers made their first appearance in 1898. But it was the department store that cemented the Gilded Age downtown as the retail shopping district of the metropolitan area.
Lord & Taylor and Macy’s in New York City were formerly dry-goods stores that added new departments to form the department store. L&T officially launched New York’s first department store at Broadway and 20th in 1870. The adjacent blocks around L&T acquired the moniker “the Ladies Mile” when other retail shops settled nearby. Macy’s fixed-price innovation and its reliance on advertising (that financed newspaper growth) transformed it into the premier department store of the era. New York City was not alone in spawning department stores; each major city grew its own. Marshall Fields, its origins also in dry goods, created Chicago’s first department store in a Henry Hobson Richardson-designed seven-story building between Quincy and Adams streets in 1887. Boston established Filene’s and on and on.
Banks, hotels, office buildings and hordes of specialist retail, entertainment (theaters) and personal service stores flooded into the CBDs. Without fanfare residential neighborhoods, factories and warehouses in or immediately adjacent to the CBDs were torn down one by one. “In Pittsburgh some 428 buildings were constructed in the CBD between 1888 and 1893 and another 356 between 1894 and 1906. The building boom in downtown Pittsburgh typified the experience of industrial cities across the nation” (Mohl, 1985, p. 41). “The Loop” (coined to describe Chicago’s downtown after its 1895-97 elevated railway) in Chicago was born. Public buildings, museums and cultural institutions filled what few empty lots remained. By 1900 the CBD was in its robust glory, a center of hustle and bustle, of memories and traditions in the making.
The innovation that made the CBD famous, that created the never to be forgotten skyline of the modern industrial city, was the skyscraper. New York, not Chicago, drew first blood. Elisha Otis pioneered his first elevator-driven building in 1853 Yonkers, and commercialized it as an exhibit in the 1854 New York World’s Fair.1 At 488 Broadway in 1857 he installed his first elevator. Four years later his first steam-powered elevator for department store E.W. Haughtwhat became the first known public-use elevator. New York City (in the 1870s), using traditional masonry construction, constructed the Western Union and the New York Tribune buildings (each 260 feet). But elevators and masonry construction alone did not a “real” skyscraper make. The first “true” skyscraper, using an internal steel skeleton and light masonry curtain walls, was built by William LeBaron Jenney in 1885—the ten-story Home Insurance Building in Chicago.
Jenny’s innovative achievement touched off a wave of late nineteenth-century skyscraper construction in the new architectural style—a style that emphasized efficiency and economy, and has come to be called the Chicago School of Architecture: Chicago architects Louis Sullivan and Daniel H. Burnham “covered the whole business district with a new architecture and changed the face of a great modern city” (Mohl, 1985, p. 45). New York caught up and surpassed Chicago—but not in the nineteenth century. The skyscraper/elevator meant that, for the first time, the city could build up, not just out.
Neighborhoods: Subdivisions and Slums
Streetcar routes became commercial spokes radiating to the city periphery, where ample room permitted manufacturing firms to build modern, land-consuming facilities laced with railroad sidings and worker housing—working-class residential neighborhoods were as common as affluent neighborhoods. Secondary business districts formed along streetcar routes: one block in from the streetcar line were multifamily apartment buildings and a host of retail and service stores; many a mom and pop pioneered food products in these early years—potato chips in George Crum’s (half African/half Native American) 1853 Saratoga Springs restaurant (Waller, 1966).
The push to the city periphery by industry and the middle/upper classes fostered new neighborhoods, making residential class segregation a simple fact of American urban life. Housing, more expensive in newly created neighborhoods, meant paying the price that also included a daily round-trip streetcar ride. Neighborhoods became class enclaves as well as ethnic ghettos. Although a few immigrant neighborhoods were settled almost exclusively by a single ethnic group, by the Gilded Age most were micro-melting pots. Within more or less culturally cohesive neighborhoods schools, churches, ethnic small businesses and social/cultural institutions served as foundations for future social, economic and political change (Hoffman, 1996). How Gilded Age neighborhoods came into existence is demonstrated through example—from our old friend, Boston’s Henry Whitney.2
As mentioned earlier, in the 1880s Whitney owned Boston’s West End Street Railway and its subsidiary, the West End Land Company—the perfect set of vehicles to develop an 1880 subdivision. By 1886 Whitney also owned most of Brookline, home to today’s wealthy (George Romney). Frederick Law Olmsted prepared Brookline’s landscape plan. To preserve its property values “restrictive covenants” were enforced— against the Irish, of course. Whitney was content with selling land to small-scale developers who built homes to order—the typical pattern of many Gilded Age suburbs (Ward, 1998, p. 86)
While Whitney’s Brookline goings-on unfolded, a non-Whitney initiative also happened on Boston’s other side of the tracks—in Roxbury (annexed 1868), West Roxbury (annexed 1873) and Dorchester (annexed 1870).3 These subdivisions were working class, developed only after annexation by the City of Boston. Without annexation, they could not afford the water-related infrastructure; they were dependent upon Boston installing it. Restrictive covenants were also characteristic of these working-class suburbs—covenants sensitive to class not ethnicity. These landscapes differed from that of Brookline in that:
Instead of elegant brick built houses and apartment blocks, there were modest wooden single family detached cottages along with two and three family houses. Instead of Olmsted’s elegant centerpiece boulevard there was a myriad pattern of small developments offering lots and residences of varying sizes and graded by price. Roughly 22,500 dwellings were built in these three suburbs between 1870 and 1900, yet no one developer was responsible for more than 3 percent of them. (Ward, 1998, p. 86)
Gilded Age periphery subdivisions differed in size, quality of construction and physical layout. Subsequent generations of city dwellers would be able to “move up.” This move up formalized into a pattern of residential housing succession that arguably continues in ebb and flow to this day.
There were other neighborhoods; some called them ghettos or slums. These neighborhoods were located chiefly (but not always) in older, core areas of industrial cities, adjacent to the emerging CBD in-filled with a maze of alleys on, and between, streetcar lines. The never-ceasing horde of impoverished immigrants clustered so densely into these units that housing could never be maintained. Whatever glimmer of innovation the housing industry mustered to improve conditions in these immigrant neighborhoods was destroyed by extreme density. Apartment houses, row housing and tenement housing (innovations all in their day) were overwhelmed; these neighborhoods evolved into human and residential disasters. Residue from these slums (crime, disease, fire, unemployment and guilty consciences) fueled reformers from whom the community development approach would develop.
Gilded Age Suburbs
Arguably, suburbanization is among the most controversial topics in the urban-related professions. Suburbs, like the poor, have always been with us. Suburbs did not begin with Levittown New York in 1947. They reflect a poly-nucleated metropolitan reality that is a normal feature of the industrial city. In this section, I present a brief outline of American suburban history through 1900. Several key suburb-related concepts— annexation, suburban autonomy and residential succession—will be broached. I also make the point that there are several types of suburb.
Henry Binford (1985, p. 10) suggests that nineteenth-century suburban development occurred in three overlapping but distinct phases:
- 1789–1837/43, when suburbs were a “booming fringe economy—a zone of manufacturers and commercial activity—related to the city, but not requiring contact” with the city;
- 1837–50, when rail commuter lines pushed into urban fringes and suburbanites built bridges/roads connecting to the central city and integrating fringe areas with the central city;
- 1843–1900, when fringe areas evolved into suburbs by accommodating commuter residential preferences and institutionalizing housing construction as its core industry cluster.
The periphery of the city in this era [pre-Civil War] was not the country. The edge was neither rural nor urban. It formed a distinctive gateway between city and country. Entrepreneurs in this zone ran industries that required extensive space … and more noxious ones … Residents might have entertained bucolic fantasies about moving to the countryside, but they entered a zone of ‘improvement enterprise and the fringe economy. (Hayden, 2003, p. 22)
Still, stereotype can mirror reality. The “affluent enclave” characterized many Gilded Age suburbs. Bernadette Hanlon estimates affluent suburbs to be about 10–12 percent of current inner-ring suburbs (Hanlon, 2010, pp. 114, Table 8), suggesting a solid core of longstanding, stable suburban communities. Garden city residential suburbs value exclusivity and order, not growth. Economic development was not prioritized; yet these, now aged, suburbs are still fairly vigorous—and still pursue exclusivity rather than growth.
Glencoe Illinois in 1869 is another example (Ferris Bueller’s Day Off and Sixteen Candles were filmed there). Its village manager government includes no EDO. Llewellyn Park New Jersey, conceived by Llewellyn Solomon Haskell in 1853 and opened in 1857, is thought to be the nation’s first planned suburb (12 miles outside New York City). Despite some future garden city-like elements, Llewellyn Park is more a Privatist gated community—a high-income subdivision housing the likes of Thomas Edison, George Merck and the Colgate family. Its Ramble, a 50-acre common park, owes much to New York’s Central Park which had just opened. Also in 1869 Olmsted and his business partner Calvert Vaux planned and incorporated the Riverside Improvement Company to build a new residential community 9 miles north of Chicago. Acquiring 1600 acres with access to commuter trains, they platted 2500 individual half-acre lots on which they proposed construction of single-family detached housing located on a winding, tree-lined (non-grid) road system sprinkled with several parks. They called Riverside a “garden city.” It was meant for workers as much as anyone, and was advertised as “a perfect village in a perfect location.” The project entered bankruptcy in 1873 and was incorporated into a Cook County village in 1875. Olmsted subsequently tried developing a New York City suburb, Staten Island.4 He finalized a proposal to transform “that malaria-ridden swamp into a system of winding tree-lined roads and parks suitable for residential speculators” (Boyer, 1986, p. 41).
Annexation
Annexation has always been the most effective counter to suburbanization. Northern and midwestern Big Cities annexed intensively during the Gilded Age; not quite as robustly as Oklahoma City or Dallas in later years, but sufficiently robustly to capture escaping populations. There were exceptions of course. Whitney’s Brookline Massachusetts refused to be annexed in 1874; but, then again, Chicago’s largest annexation in 1889 netted 125 square miles and over 225,000 new tax payers—not too shabby. In 1898 New York used another device, borough consolidation, and its five boroughs become our proverbial “New York, New York.” At first, courts and state legislatures were amenable—and, contrary to myth, central cities chased their footloose population through annexation.
Every Big City changed boundaries dramatically in the course of the nineteenth century, sometimes absorbing empty space, sometimes annexing neighboring communities (Jackson, 1972). The nine United States cities that contained more than 100,000 people in 1860 fell clearly into two categories with regard to suburban growth and annexation. Two cities (New York and Baltimore) contained large amounts of territory from an earlier date, and thus had ample room for many years of residential expansion within existing boundaries. The other group (Philadelphia, Brooklyn, Boston, New Orleans, Cincinnati, St. Louis and Chicago):
annexed some of their first residential suburbs but found their overtures resisted by others. Proposals for annexation usually found strong support in cities, but generated heated controversies in the suburbs … In general, the more prosperous and mature a suburb … the less its likelihood of being annexed. (Binford, 1985, pp. 10–11)
At some point suburbs began to resist annexation. Why?
Suburban Autonomy
Why the push-back? Richardson Dilworth (2005) presents a reasonable rationale for the noticeable rise in suburban autonomy in the late Gilded Age: he blames it mostly on central city political machines—and water. Suburbia reacted negatively to ethnic political machines, perceiving potential impacts on their financing of suburban infrastructure. To Dilworth, an intimate relationship between central city infrastructural development and central city political corruption generated nineteenth-century Big City suburban autonomy.
New public works projects in [central] cities made millions of dollars available to politicians who used that money to build their power and enrich themselves … political “bosses” … [William] Tweed in New York, William Bumsted in Jersey City, and James Smith Jr. in Newark—put themselves personally in charge of the agency that had responsibility for public works. One result was that large infrastructure projects in [central] cities were often accompanied by well-publicized political scandals. As cities then attempted to … annex outlying communities, they met resistance from suburbanites who did not want to be taxed at exorbitant levels to support what they viewed as venal political organizations. (Dilworth, 2005, p. 5)
In Dilworth’s mind, suburban autonomy was a reaction to the threat of political corruption that led to resisting annexation and suburban incorporation to preserve fiscal soundness and accountability by managing their urban infrastructures. Ironically, Dilworth observes, the pioneering experience and expertise of central cities in installing/managing (water) infrastructures lowered suburban infrastructure costs: making infrastructure affordable to smaller suburbs justified suburban incorporation. Infrastructure meant a suburb could build its own economic base.
So, in summary, metropolitanization (central cities and suburbs) is an early feature associated with the industrial city—not a post-World War II distortion inflicted upon central cities. The existence of metropolitan areas was noticed at the time. The federal Bureau of the Census acknowledged in 1880 the existence of suburbs by demarcating the New York “metropolitan district” composed of central city and suburbs. The Bureau did not provide statistics for these districts until 1910, when it reported that 25 metropolitan districts existed and that 10 percent of the population lived in suburbs (McKelvey, 1963, p. 51).
POLICY ACTORS IN GILDED AGE MUNICIPAL POLICY SYSTEMS
Andrew White, founder of Cornell University and first President of the American Historical Society, wrote: “Without the slightest exaggeration … with few exceptions, the city governments of the United States are the worst in Christendom—the most expensive, the most inefficient, and the most corrupt (White, 1890, p. 213). White echoes Lord James Bryce’s comment that:
There is no denying that the government of cities is the one conspicuous failure of the United States … The faults of state governments are insignificant compared with the extravagance, corruption and mismanagement which mark the administrations of most great cities. (Bryce, 1888, p. 642)
A few years later, reform journalist Edwin Godkin described “the present condition of city governments in the United States is bringing democratic institutions into contempt the world over, and imperiling some of the best things in our civilization” (Godkin, 1894, p. 882). As late as 1933, Arthur Schlesinger half-heartedly muttered that municipal services in the last decades of the nineteenth century were “creditable to a generation … confronted with the phenomenon of a great population everywhere clotting into towns” (Schlesinger Jr., 1933, p. 120).
The perceived fault for this charming state of affairs was fragmented government imposed on cities by state constitutions crafted from earlier Jeffersonian–Jacksonian eras. Population growth, physical expansion of the city and industrialism simply overwhelmed pre-Civil War urban governance. I agree with this argument—as far as it goes. Having made the case that some of the best infrastructure that existed in the world at that time was clumsily but successfully installed in our Big Cities, I would add that the lack of an acceptable HEDO that linked private resources with governmental powers created the perception that the era was worse than it actually was. Moreover, as will be developed, Gilded Age municipal policy systems were bipolar hybrid systems containing two warring elements (machines/businessmen) that collectively produced policy outputs and policy implementation that led to the first paragraph compliments.
Governmental weakness is usually charged off to its fragmentation: bicameral city councils; the election of numerous independent public offices, from the proverbial dog-catcher to city comptroller—and a weak, mostly symbolic mayor. The era’s almost total lack of government bureaucratic capacity is striking. This is a low-tax era, and there were few bureaucrats hanging around city hall—those who were there were tied to elections, not to governance. Budgeting was a line item, audits were often ignored and elected officials tied to an election cycle of two years—sometimes annual. Any change required concurrence from the state legislature, which was not impossible but did consume time and required compromise with state representatives who had local ties and ambitions—not to mention partisan differences. Competent and accountable municipal government took more than a half-century to construct—there was precious little of it during the nineteenth century.
The principal tasks of this section, therefore, are to outline: (1) how municipal governance incorporated warring elements and conflicting ED goals that affected ED policy; and (2) in what ways these hybrid policy systems started down the road to forge governmental EDOs that someday could participate effectively in municipal economic development policy-making. Don’t expect miracles during the Gilded Age, but Big City governmental economic development began its long slog—a slog that would take nearly a century.
Machines, Big City Governance and Economic Development
Mention the words “political machine” and visions of Tammany Hall, Tweed Ring and Christmas turkeys to starving immigrants dance in one’s head. The patronage-saturated but well-meaning Spencer Tracy as Frank Skeffington (Boston’s James Michael Curley) uttering on his deathbed in The Last Hurrah (1958) “Like hell I would”—putting a heartless efficient Yankee in his miserable place. Tons of political machine stereotypes float around in today’s history books; most have precious little relationship to the machines and their involvement in Gilded Age municipal policy-making.
Political machines came in several Gilded Age varieties: Philadelphia exhibited two forms; Boston’s machines operated at the ward level, not city-wide. Baltimore’s machine was state-level; Detroit didn’t really have a machine—and neither did Chicago—but ward bosses amassed power in city councils.5 And then there was Tammany and Cincinnati’s George Cox. There is one element of truth in the machine stereotype with which we begin discussion: the machine rested on immigrant and the working-class neighborhoods of our Big Cities.
A political machine does not have to control the entire urban policy system—it can control or dominate only one element or institution within it. Except for very brief episodes, most Gilded Age municipalities were not machine-dominated policy systems. Yet, nearly every municipal policy system in the Age exhibited somewhere in its policy system machine-controlled institutions and geographical districts.6 Machines impacted economic development hugely. Amazingly, because most economic development of the period was mainly handled by private entities, a great deal of Gilded Age municipal ED lay outside of machine control.
What machines did do is suck the wind out of the Progressive approach to ED. Helping the poor and disadvantaged to the benefit of the entire municipal community was supposedly what that approach is all about. Up to this point Progressively inclined policy systems rested mostly on homogeneous cities—forget about that in Gilded Age Big Cities! Boston, the heart and soul of American Progressivism, was at war with the Irish Catholic—and vice versa. Boston Brahmins headed for the suburbs and engaged in a war some say continues, albeit muted, to this day. The truth be told is that state–municipal level Privatists ran Pennsylvania’s machines, and in most Big Cities (NYC being the exception) machines only occasionally swept to city-wide victory. Rather, most typically ethnic machines, controlling one or both bicameral legislature, delivered policy outputs that strikingly resemble today’s community development initiatives—complete with maximum feasible participation from the disadvantaged. But let’s not get ahead of ourselves. Much of that story lies in future chapters. Let’s outline here how Gilded Age hybrid municipal policy systems produced ED policy.
Machines shared Big City municipal policy-making with increasingly stronger mayors, independent boards and commissions, and comptrollers and aggressive business organizations such as the Chamber and Real Estate Exchanges. To the extent they controlled anything, ward-based machine bosses dominated Big City councils (Teaford, 1984, pp. 176–82). City-wide bosses, however, infrequently existed. On the other hand, machine politicos were among the very first pure political class found in America.
Although the city council of the late nineteenth century may have played a more limited role in formulating policy of city-wide significance … It survived as the voice of the neighborhoods … by which the fragments of the metropolis could win concessions and favors from the ever-more-powerful executive offices of city government. It was the channel through which constituents won exemptions or licenses and neighborhoods obtained pavements, sewers, or water mains … Aldermen of the 1880’s and 1890’s were masters of the microcosm and not overseers of the macrocosm. They were big men at the corner saloon but small fry when compared with the bankers and brokers downtown. (Teaford, 1984, p. 15)
Machine influence was superimposed on the previously existing, fragmented, chiefly business-dominated Big City policy system. In effect, the Gilded Age Big City policy system was one in which two contrasting visions of economic development competed—and cooperated.
Machine power, such as it was, came from the continuous stream (to 1920) of crushingly poor immigrants who, for defensive reasons alone, clustered together in the oldest neighborhoods and housing their city had to offer (Banfield and Wilson, 1963, p. 79). By 1890 rates of foreign-born people in most eastern/midwestern Big Cities were in excess of 30 percent (Mohl, 1985, p. 20 Table 4). Machines rested on and “conveyed” the interests and political “style” of these immigrants and the native working class. With no social service system of any consequence in existence, the famous machine social services, though exaggerated, filled a gap. In this world, an exchange of a turkey for a job was a wonderful offer—a drink at the local bar more important in a Prohibitionist Privatist atmosphere. After all, most immigrants had no intrinsic loyalty to a municipal democracy, and little experience of it.
Immigrants clustered into more or less class-homogeneous neighborhoods that overlapped with electoral wards. The ward is key to understanding Gilded Age (and pre-1920) machines. Ward-dependent machines are congruent with today’s neighborhoods. Machines characteristically revolved around and resolved neighborhood issues; they addressed “people-based” demands their residents wanted (bathhouses, bars and jobs). That they exhibited a personalistic, almost opportunistic political style was reasonably acceptable to their constituencies.
Machines—in addition to social services, ombudsmen and jobs/patronage—also opposed nativism (anti-immigrant) politicians, parties (Know Nothing) and mobs. Whenever possible, machine policy outputs benefited neighborhoods and residents. From the machine’s eye, sewers, roads, streetcar routes and electrification were appreciated through the prisms of ward boundaries and neighborhood residents. Kickbacks didn’t hurt either. Gilded Age machines were not policy neutral as the conventional machine model assumes; they were indifferent to the middle class-style and city-wide policy perspective—like Donald Trump advocates. To the extent machines attempted city-wide economic development-like “growth” policies, it was to suck from them graft, kickbacks, abusive bond issuances and patronage opportunities. This is where Tweed and other ward bosses made their fortune—and why the business community hated them. Late Gilded Age machines (Thomas Pendergast and Murphy, for example), fearing a fate like Tweed, made their deal with the business community and siphoned off kickbacks/patronage in return. By the end of the century the two competing factions had learned how to work with each other to produce acceptable policy outputs.
In the context of their day, their economic development could be described as neighborhood-oriented and people-serving. Jobs, access to affordable urban infrastructure, bathhouses and playgrounds, loans, the parochial school, ethnic moms and pops, bars and alcohol, protection from mobs, bankers and landlords, “their” police/fire departments, cultural identity and the Knights of Columbus—not all of which is pure economic development to be sure, but all of which is intended for neighborhood residents. Whether or not ward machines are among America’s first community developers, I’ll leave to the reader’s judgment; but overlap with present-day community development did exist. Personally, I believe machines are America’s first example of indigenous working class-led community development. But they are only one half of our hybrid Gilded Age policy system.
Businessman Mayors
Through their control over voting in immigrant neighborhoods, ward bosses were a powerful force in city legislatures. That legislative power, significant through it was, did not provide sufficient strength to dominate the municipal policy system. Before the mid-century, mayors were largely symbolic heads of state in the Jeffersonian– Jacksonian democratic policy system. Starting just before the Civil War, and accelerating thereafter, mayoral power was on the rise. Pressures and tensions that fell upon them required cities to greatly enhance their ability to get things done city-wide. The mayor was the logical place.
Providing veto power to the mayor was the first augmentation, and New York City started it off in its charter reform of 1830. Boston and Philadelphia followed suit in 1854; Pittsburgh, in 1874, was relatively late in allowing its mayors to item veto.7 Mayoral vetoes usually required a two-thirds legislative vote to override. Veto power was exercised liberally by mayors; for example New York City’s Mayor Hewitt in 1887 vetoed 285 City Board of Alderman ordinances out of 920—with only 48 overrides. Chicago mayors between 1882 and 1889 issued around 60 vetoes, with only 9 overrides. Baltimore mayors in the same period issued 169 vetoes, suffering only 15 setbacks (Teaford, 1984, p. 44).
The 1857 New York City charter launched a national trend to entrust mayors with appointment power of city administrative officials. St. Louis and Illinois State, copying New York City, did so in 1876 and 1872 respectively. Boston and Philadelphia 1885 charters increased mayoral appointive powers; in both instances city councils lost their right to veto mayoral appointments. Buffalo’s charter of 1892, New Orleans’ charter of 1896 and Baltimore’s 1898 charter followed suit. Appointment power initially had significant limitations: important department heads were appointed for specific terms which seldom corresponded to the mayoral term. It was not at all unusual for mayors to not have complete control over departments until the later years of their term. Yet in 1895 New York City mayors acquired authority to remove department heads appointed by previous mayors. Also, it was customary by 1890 for mayors to sit ex officio on key boards and commissions. By the turn of the century, Big City mayors could form an “administration” loyal to their direction, rendering the office the dominant force in city policy-making.
Who were these Gilded Age Big City mayors? If aldermen were elected because their saloons offered the best “happy hour,” mayors came from a different breed. The mayor’s office possessed dignity, and city-wide governance implied experience and demonstrated success. Incompetents could easily mean future tax increases, boondoggles and higher utility bills. Even bosses like Richard Croker preferred to back “old-stock, downtown … elite Americans of Anglo-Saxon ancestry”:
Late nineteenth century mayors … throughout the nation … conformed to a pattern of business success, outward respectability, and city-wide influence … the preserve of that class of men who dominated the social and economic life of the city … . Mayors Cooper, Grace, Hewitt and Strong of New York City belonged to the same clubs as the Astors, the Duponts, the Morgans and the Vanderbilts. Philadelphia’s chief executives were Union Leaguers and Boston’s mayors were familiar faces to the clubmen of the Back Bay. Nineteenth century Americans looked up the social ladder when choosing their mayors and elected those on the higher rungs. (Teaford, 1984, pp. 48–9)
Only one Gilded Age New York City mayor (Thomas Gilroy) departed from the pattern of businessman mayor: Chicago’s illustrious five-term mayor Carter Harrison Sr. was a successful businessman; in Boston two Quincys served as mayor during the Gilded Age; and Baltimore’s Ferdinand Latrobe descended from one of Maryland’s most distinguished families. With a few exceptions, northeast and midwest Big Cities, regardless of partisan affiliation, consistently elected businessmen (or Civil War generals) as mayors during the Gilded Age. In that mayors of this background usually had longstanding chamber membership, governance experience and contacts, they were the chambers’ principal link to city government.
Real Estate Boards
Speaking of chambers—where are they? Chambers were the most powerful EDO of the Gilded Age, so powerful that a goodly portion of the next chapter will discuss their activities and role. In this chapter urban physical expansion fostered new players whose activities overlapped into economic development. One new player, the National Board of Fire Underwriters (founded in 1866), set uniform fire insurance rates nationwide and acted as lobby for/against state-level legislation. The National Board pushed localities to approve stringent building codes and form well-trained/equipped fire departments. Their logic is fairly self-evident. In 1871 Chicago burned down. The fire destroyed an estimated 15,000 buildings (31⁄2 square miles), driving 68 insurance companies into bankruptcy. The Boston fire of 1872 destroyed 750 buildings and 65 CBD acres (Teaford, 1984, p. 199).
Cities formed boards of fire insurance as early as 1857 (San Francisco). Insurance firms, through city regulation, imposed constraints on home builders, banks and the like. Electrical codes were commonplace by 1892. Insurance firms and fire underwriters affected municipal taxes/regulation and reached into the pockets of real estate businesses—the more stringent the codes, the more expensive. That’s why New York City probably was first to form a Real Estate Exchange. Amendments to its building laws in 1885 and 1892 added four new members to the city’s Board of Examiners: one the Real Estate Owners and Builders Association, another the New York Real Estate Exchange (Teaford, 1984, p. 203). These entities stopped the New York City subway.
Real estate boards/exchanges were, and are, industry trade associations, composed of individuals/firms engaged in real estate, property ownership, development and redevelopment. Membership extended into banking, construction and insurance. State-wide real estate associations were also established. Allegedly the first state-wide Real Estate Board was set up in New York in 1896. However the Greater Boston Real Estate and Auction Board (GBREB)—formed in 1889—claims to be the nation’s oldest metropolitan real estate exchange. The GBREB’s first chairman, Frederic H. Viaux, played a critical role in introducing the electric trolley to Boston. The Board lacked, however, the power to veto municipal real estate actions as did New York City. Originally the GBREB signed up 100 members (7000 today), including the best known real estate men in the city. Its activities and membership grew quickly, and in 1903, at the bequest of the chamber of commerce, the exchange took part in high level conferences regarding reforms under consideration by the Boston city government (Sturges, 1915). In the 1920s the GBREB was deeply involved with planners, formulating/implementing new zoning and building code ordinances.
Most municipal real estate boards followed some version of the GBREB’s evolution—at least until World War II. The Boston Exchange, by virtue of its focus, intense and consistent involvement—and its pivotal intermediary role to private financing and insurance—developed a near monopoly over the city’s residential/ commercial expansion. CBD development was essentially a real estate activity whose policy-making and implementation were shaped by real estate exchanges and property owner associations. In the Gilded Age, privately owned franchises and utilities in close alliance with real estate exchanges fit the image associated with the infamous growth coalition of future years.
These firms translated population growth into private profit. In the Gilded Age, exchanges were neither responsive to nor sympathetic with larger partisan issues. Preferring to stick to their real estate “knitting,” their prosperity resulted from “streetcar chasing,” or following streetcar routes to city peripheries and beyond. Real estate exchanges extended their tentacles into the hinterland, becoming some of the first metropolitan-wide players in the jurisdictional policy system.
Municipal Bureaucracies
Economic development owes much to Gilded Age independent park and public works commissions. Teaford (1984, p. 66) implies that these independent boards, bureaus and commissions were a third force (after executive and legislative) in Gilded Age city government.
These Gilded Age municipal commissions could be regarded as yet another example of hybrid, public–private entities. Commissions were government agencies dominated by mostly private boards of directors whose appointments were shared by mayor and council. Comptrollers and mayors often served ex officio, and commissions were included within the comptroller’s fiscal, expenditure, bond issuance and audit authority. Selection to boards was heavily influenced by chambers, and reserved for “persons of standing and character.” Boards were self-perpetuating, as their members would informally fill vacant positions. Important commissions often possessed independent funding and taxing powers.
Among the earliest examples of autonomous municipal bureaucracies were police bureaus. As early as the 1860s police bureaus, appointed by state governors, operated in New York City, Brooklyn, St. Louis, Baltimore and Cleveland; and by the 1880s in Boston and Cincinnati. Public health, libraries, schools and sinking-bond commissions were usually independent commissions. The motivation to form a board was to: (1) separate politics from administration, i.e. keep the legislature out; (2) reduce machine patronage; and (3) foster specialization of expertise in a critical function such as public health. Between 1870 and 1885 corporate charters endorsed boards and commissions, and these were their golden years (Griffith, 1974, pp. 52–3). They declined after passage of the 1883 Civil Service Act, which strongly suggests the commission’s transitional role between Jeffersonian–Jacksonian city government and strong mayoral government.
The most interesting commissions from an economic development perspective were parks, water and, later in the Age, public works commissions. A hint as to why park commissions are of importance to our history is that Boss Tweed “injected city government” into the construction of Central Park, an ongoing project of a New York City Park Commission. Disruptive at the time to construction, it infuriated our soon-to-be-friend Frederick Law Olmsted Sr., prompting him into a nationwide campaign—the independent parks movement, complete with parks commissions. Big City after city for the next several decades established parks commissions that launched major projects, such as Boston’s Emerald Necklace. This movement provided jobs (formed occupations), training, experience and expertise to a new developing profession of great future importance to economic development planning, and spurred a major ED movement—the City Beautiful.
Another economic development-related policy area was public works, which Griffith believes “were among the most numerous.” He observed that between 1870 and 1890 it was “medium-sized and smaller cities” that were most “remarkable for the frequency with which such boards of public works appeared in these new charters”—Tennessee and Wisconsin were especially active (Griffith, 1974, p. 56). This being an age of infrastructure installation, public works bureaus handled that vital economic development function—we suspect with chamber involvement and perhaps oversight. With some frustration, research on these small/medium-sized cities can be sparse; their sheer number inhibits our ability to deal with them responsibly. Smaller cities, for example Manchester New Hampshire, also followed the Big City trends of strengthening the mayor’s office and the propensity to use boards and commissions. Banfield and Wilson observed:
During the nineteenth century, when reformers were anxious to keep certain functions out of the hands of party machines, the practice was to create a large number of entirely independent boards and commissions—sometimes twenty or thirty. Most of these eventually became city departments under the mayor and council, but today [1963] many are still loosely tied or not tied at all to the city government proper. The distribution of authority in Manchester, New Hampshire [1880 population 32,600 and 1900 population nearly 57,000] is typical of what exists in many small cities. Manchester [in 1963] has twenty-one boards and commissions loosely tied to city government. (Banfield and Wilson, 1963, p. 82)
Did economic development participate in this bureaucratic trend? There are examples of departments and commissions attempting ED-related activities and programs during this period. Indeed, our candidate for the first governmental EDO is drawn from Gilded Age New York City municipal bureaucracy.
Department of Docks
Early in 1870, Boss Tweed, having ensconced himself in New York City Hall, sought to “access” opportunities from municipal construction and contracts. Remembering that Tweed himself maintained strong ties to the New York State legislature, he drafted a new charter for the city which eliminated several important independent boards and commissions (the Olmstead Central Park commission, for example) and converted them into departments within the mayoral-controlled Public Works Agency—of which he was commissioner. Paying state-level Republicans for their support cost Tweed an estimated $600,000, but he was able to secure approval for the charter—with one compromise. Tweed’s charter passed in Albany due to his bribe—and votes by the NYC Chamber, which secured a “carve out” for a department to be lodged in Tweed’s Commission of Public Works.
New York’s docks and wharves had recently been exposed by the New York Times as being in crisis of disrepair: “with rotten structures, the abode of rats and the hiding places of river thieves … it is at great risk that a person can walk on them” (Bone, 1997, p. 17). Business interests involved with the harbor and port facilities were concerned that the facilities had deteriorated to such a point that normal business (and profits) were in jeopardy. Something had to be done to repair this vital infrastructure or the business would flow elsewhere. Working through the state reform elements, they secured a charter carve-out for an independent Department of the Docks within Tweed’s Public Works Commission. It was agreed that business/reform interests would name the department’s head and direct staff.
So, functional responsibility for NYC’s port facilities was handed over in 1870 to a city governmental agency—New York City Department of the Docks. The municipal department’s first “engineer-in-chief” was George B. McClellan—West Point graduate, former railroad civil engineer, former commander-in-chief of the Union Army (fired by Lincoln) and 1864 Democratic presidential candidate. McClellan became a literally card-carrying member of Tammany Hall as his end of the deal (Allen, 1993, p. 149). In any case, I proudly award General McClellan our dubious honor of being America’s first professional governmental economic developer.8 His son would be a twentiethcentury mayor of New York.
McClellan’s first task was to inventory the waterfront and prepare a long-term master plan, including identifying projects that enabled New York City to compete with European harbors. He staffed the new department with able engineers such as George S. Greene Jr., son of General Greene—chief engineer of the massive Croton Aqueduct Commission and seventh president of the American Society of Civil Engineers (Teaford, 1984, p. 136). McClellan’s master plan for the waterfront (including public hearings) served as a benchmark for future economic development/infrastructure initiatives and site use. Establishment of an agency so broadly empowered as to regulate all facets of the (Manhattan) waterfront was unprecedented in the history of (American) municipalities. As cited in the 1919 annual report, the Department of Docks was:
[The] first sincere attempt at municipal ownership and administration of port utilities in America, for it had as its object the girdling of the waterfront of the old city of New York with new wharves and piers to be ultimately owned by the municipality, thus terminating all private ownership along the waterfront. (Betts, 1997, p. 44)
The New York City Department of Docks is the oldest active governmental economic development organization found by my research. The department eventually merged with the New York City Public Development Corporation, which continued ownership and management of piers and wharves, less so of harbor-related facilities, through 1966. In that year, the New York City Public Development Corporation was incorporated into another economic development entity that preserved its division. In 1991 the Public Development Corporation merged with a non-profit to form the current New York City Economic Development Corporation (NYCEDC). The Department Docks’ headquarters until 1959 was Pier A, which at the time of writing is a vacant hot dog stand with Landmark status—a fitting testimony to American economic development’s first municipal-level governmental EDO?
Administration of ports may also be a candidate for the first state-level economic development entity. The Port of Baltimore, the last of our Eastern immigrant ports, became the responsibility of the state of Maryland—not the city of Baltimore—as early as 1783. Articles of Confederation permitted Maryland to appoint “wardens” to oversee construction of wharves, clear waterways and collect duties from ships, including the famous Baltimore clippers. To be sure, the private sector owned and operated the facilities associated with the harbor, and continues to do so to the present day. The state, at first informally, “oversaw” port operations through officials known as “wharfingers.” Among other duties, wharfingers leased piers and wharves on behalf of the state (which operated the state-controlled Tobacco Warehouse) from 1827 to 1956, when the state transferred the function to the newly formed Maryland Port Authority— reorganized in 1971 into the Maryland Port Administration (a division of the Maryland Department of Transportation). The role of the municipality in the administration and management of public port facilities was nonexistent throughout Maryland’s history.
NOTES
- Otis didn’t invent the elevator or the elevator shaft—he invented the brake which stopped the damned thing. Alexander Miles, an African-American inventor from Duluth Minnesota, patented the first electric elevator in 1887.
- Samuel Eberly Gross of Chicago is another example. By 1896 Gross subdivided and sold over 44,000 lots and built 7500 houses outside Chicago. Gross’s business plan included speculative land purchase; installation of limited infrastructure; employment of contractors/builders; an early form of installment financing; alliance with rail and streetcar owners; and marketing/advertising promising the American Dream. He went bankrupt— but not because of his real estate business; his personal life is worth reading about.
- Another example is Queens New York. Led by its borough chamber, it produced a sort of “real estate guide”—a catalog of houses and associated industry advertising which extolled the advantages of living in Queens (Ward, 1998, p. 93). It too was annexed.
- Also, Olmsted laid out Brooklyn using a modified grid pattern, with a distinctive CBD architectural focal point (Crystal Palace) and a walkable scale—that worked out well?
- Teaford observes that “boss” was a label thrust upon ward leaders, lacking real substance city-wide. His description of Chicago’s William Lorimer (1984, p. 179) supports his assertion that “no one in Chicago during the late nineteenth century could legitimately claim the title of city boss.” Lorimer, he asserts, at the height of his power could at most lay claim to eight of the city’s 35 wards.
- Banfield and Wilson (1963) observed about 1850 a movement that dramatically increased the size of municipal legislatures. It certainly facilitated “neighborhood/people-style” focus of the legislature.
- The Illinois 1872 Municipal Corporations Act provided state-wide mayoral item veto; the St. Louis 1876 charter also provided item vetoes to its mayor. By the end of the century “mayors throughout the nation” possessed the line item veto (Teaford, 1984, p. 43).
- McClellan’s salary was an astronomical $20,000—his successor only got paid $5500. City departments had been involved with ports/facilities since 1789 (and earlier). Usually this amounted to subleasing land/facilities to private firms, and intermittent dredging. The federal government played a major role in the early New York waterfront with a customs house, forts, coastal lighthouses and immigration facilities. The 1879 Rivers and Harbors Act cemented a primary role for the federal government in rivers and harbors.
Ron W. Coan 