Big City economic development

The last chapter set the stage for economic development described in this chapter. Three main topics constitute core concerns of this chapter: (1) presenting chamber-style ED; (2) introducing port authorities; and (3) presenting a case study of a little-known municipal/state ED program (selling frozen water) and its struggle with Dillon’s Law (see Chapter 3). The time period stretches from post-Civil War through the first decade of the twentieth century. The backdrop to these topics is that sub-state ED was in full flower as a legitimate policy area and potentially developing profession. Chamber-style ED dominates both—and will continue to do so for the next 50 years or so. Dominate, however, does not imply exclusiveness; there is a lot more going on besides chambers. While this history does not subscribe to the so-called ED wave model, others do. This chapter challenges the simplicity and broad-stroke nature of that model. Chambers are much more complicated, and performed valuable services/functions for their jurisdictions. But, it must be admitted, if you distrust capitalism and the private sector, then this chapter is not for you. This period of American history has a distinctly Privatist bent—even Progressives appear as Privatist in these years. Partially, the prevalence of hybrid machine/businessman policy systems sucked much of the air from Progressive community development. Machines, intended or not, were CD-like in focus and outputs, and their failings moved many a moderate Progressive into Privatist EDOs and opposition to machines. Moreover, as this chapter’s last topic will reveal, the struggle against Dillon’s Law was structural in nature (home rule)—an initiative that good Progressives and Privatists could join in a common struggle. Community development will be discussed in the next chapter, but here ED lies on the fringes of jurisdictional policy-making.

One reason beyond machines that the period is Privatist in tone and practice is the flux and constant change, or growth and innovation if one prefers, that underlies much of ED in this chapter. Jurisdictional economic bases in the Big Cities have certainly developed and are maturing in these years, but new cities are emerging from earlier city-building. If capital is indeed mobile, it had plenty of opportunities to choose from. Economic development is highly sensitive to the fluid, competitive urban hierarchy— and the era’s ED practice, tools and programs focus on growth amid a competitive environment. Lost in plain sight is that this is the period of growth for our Big Cities—this is ED in a growth environment. Surprisingly, much of ED’s concern in this atmosphere is coping with, keeping up with, growth—streetcars and infrastructure, electrification, industrial parks, foreign trade: and a restive workforce consumes much attention by EDOs. Today we tend to focus on attraction as a dominant activity in this period, but it was secondary and surprisingly defensive in nature. Big Cities feared other Big Cities, and what looks like attraction includes strong doses of retention. Chambers were boosters, but no more so than most twenty-first-century state-level governmental EDOs.

The structure of American industry, and its overall economy, is concentrating in the hands of fewer corporations and business elites (oligopoly). In this era those corporate elites still function from the local level and will begin to make the shift to Washington only in 1912. Through most of this period chambers serve only the biggest of the big boys—leaving plenty of room for competing jurisdictional-level Privatist EDOs for others to join (boards of trade for instance). That will begin to change in the first decade of the twentieth century: chambers will change and modern port authorities will come into fashion, solving to a great degree the problem of hybrid EDOs that saturated our previous chapters. The port authority model will evolve over future chapters, morphing into housing and urban renewal redevelopment agencies, and into our present-day industrial development agencies and tax-exempt bond-issuers.

As the reader will discover, many (if not most) of the important strategies, tools and programs associated with contemporary ED will be developed by chambers in this period. Chambers were the prime or lead agencies of the Big (and small) City jurisdictions, Indeed, chambers will sweep across the nation. Municipal government, as will be discussed, plays a secondary role—if that. There are reasons for this—and it is not a capitalist conspiracy. Capitalists are fighting hard to convert local government into a modern and efficient driver of policy and policy implementation. Local (and state) government’s problem is what we label a lack of capacity to govern. Policy system change will follow in the next chapter.

Meanwhile we turn to chamber-style ED, the meat and potatoes of American economic development at the turn of the twentieth century. The story begins with a personal tale of one company that opened my eyes to the constancy of chambers and their pioneering innovations on behalf of ED.

BEYOND BOOSTERISM: CHAMBER-STYLE ECONOMIC DEVELOPMENT

Post-Civil War Chambers: The “Denny Tag” Story

While I pondered weak and weary, having completed a chapter, my mind wandered. Trying to postpone more hard work, I gazed about my cluttered desk. Off in the corner was my trusty old 15-inch metal ruler. My mother had given me the ruler sometime before I was 10 years old. She had been given the ruler by her dad as a child. How long had he owned it, who knows? The metal ruler was at least 100 years old—probably slightly older. I had wonderful memories of the ruler. In my childhood it made a great sword; the thin metal and the sharp edges drew blood and made me a fearsome swordsman. It also shot rubber bands with paper clips attached. Anyway, bored, I read the advertising on the ruler and wandered into a random but eye-opening research project.

The ruler was made by the Denny Tag Company from West Chester PA. The company advertised on the ruler that it was “America’s largest plant devoted exclusively to the manufacture of tags.¹ Searching on Google, I chanced upon a history of the company (Jones, 1988). Denny Tag manufactured tags and pin labels. Founded in 1884 Philadelphia by two brothers who had developed their own tag-making machinery, by 1886 they employed 10 workers and allegedly was the second oldest tag manufacturer in the nation.

In 1888 the owners of Denny Tag investigated the neighboring suburb of West Chester as a possible location for a larger plant. So the Denny Tag brothers met with the West Chester Board of Trade, announcing that if West Chester had a suitable location the company might relocate. Denny Tag then employed 20 and wished to expand to 40 workers. According to Jones, this was music to the Board of Trade’s ears: “The creation of forty jobs in West Chester would lead to a population increase of 150–200 people, and they would spend their salaries in West Chester.” No job creation then; instead it appears that increased population was the goal du jour of economic development, but multiplier effects were already in style. The company suggested it had $2000 available, but needed $7000 to make relocation possible.

West Chester “investors” quickly met at the Board of Trade’s bequest, assembling commitments for $20,000 in return for positions on Denny Tag’s board of directors. The Board of Trade found a West Chester site (an old school) and added to the “investors’” monies ten years of relief from borough taxes.² The West Chester Board of Trade made the offer. Denny Tag accepted the incentives and moved into its new suburban location two weeks later. Within four years (1892) Denny Tag grew to become the second largest tag manufacturer in the nation; factory capacity exceeded 500,000 tags per day. They expanded to other cities and developed new product lines (my ruler was made in Pittsburgh).³

What first impressed me was that in 1888 Denny Tag detailed a Privatist, chamberstyle economic development that probably typified pre-World War I Big Cities. What also struck me, as I thought more deeply, was that by 1888 an economic development deal—identical to many I had worked on in my late twentieth-century career—was already being cut by economic developers of that year. I could have negotiated the same deal today in my public sector, quasi-government EDO. Almost escaping my attention was that a suburb had “stolen” a central city manufacturer with incentives such as loans, sites and tax abatements— even small, suburban chambers were deeply involved in 1880s’ economic development. Had anything in economic development practice really changed over the last 135 years?⁴

American Chambers of Commerce

Chambers of commerce had been around in Europe since the sixteenth century.⁵ Colonial/Early Republic chambers crashed and burned on a regular basis. Most Early Republic chambers failed by Civil War’s end; but a few remained in Boston, Chicago, Buffalo, Pittsburgh and New York. Old-style chambers (ignore Boston) stayed away from public affairs and served as mediators of business disputes. A new-style chamber emerged after the Civil War.⁶ These held a larger world view and assumed leadership in municipal and economic affairs. Most Big (and small) City chambers were established during the Gilded Age. In 1868, at Philadelphia, 33 chambers/boards of exchange established the National Board of Trade.⁷ An 1890 report, prepared by the Scranton Board of Trade (Pennsylvania) for the National Board of Trade, uncovered 1171 chambers/boards of trade in existence (Mead, 2014, pp. 392–7).

Gilded Age chamber leadership was restricted to the largest firms and the oldest money. Kenneth Sturges (1915, p. 43) describes the new style chamber as “a new organization conducted by the best type of citizens and businessmen … interested not only in the upbuilding of commerce, but also in the betterment of community life.” The example was set by the New York City Chamber, its membership limited to the top 1000 corporations. In 1896, for example, its 12-person board of directors held 11 millionaires; its vice-president was J.P. Morgan, and directors included John Jacob Astor, John D. Rockefeller and Cornelius Vanderbilt (Teaford, 1984, p. 189). The jurisdiction’s “1 percent” formed the nucleus of each Big City chamber (Mead, 2014, p. 130). Chamber secretaries (the only staff), while high status, were more facilitators for the Great Men of Business than independent powers. If staff were needed, the big boys would “second” staff from their corporations.

With the richest and most powerful on their boards, Gilded Age chambers stepped up to the plate. When the NYC chamber picked up a dead issue, it pushed back Tammany, got the state legislature in proper order, oversaw the Subway Commission and fiscally monitored subway construction. This was a big deal issue, and the chamber saw it through successfully. Activities comparable can be easily found in other cities as well.

[Chambers] issued a growing body of resolutions to the city councils and mayors’ office and organized a string of committees to draft municipal legislation or lobby for change in municipal policy … chambers and boards applied their traditional booster spirit to the cause of good government. (Teaford, 1984, p. 189)

Lost in the fog of history, chamber boards early on became vociferous opponents of the railroad robber barons. It’s not hard to understand why. Almost every sector of industry was victimized by railroad freight discrimination, excessive rates, bribes, rate pooling and stock manipulation. Cities paid enormous bribes to attract railroads—but that didn’t mean they enjoyed it. In 1879 the National Board of Trade voted 42–3 for national regulation of railroads. The Chicago Board of Trade had harsh words for railroads; but it was the New York City Chamber of Commerce that formed a

Committee on Railroad Transportation in 1878 to call its director, Cornelius Vanderbilt, to task: he admitted to the committee that “we [his railroad] have been actuated by selfish motives” (Mead, 2014, p. 124)—the worm had indeed turned. The New York State legislature responding to the New York City Chamber approved anti-railroad legislation and established a state railroad commission in 1882. Many states followed its example. In 1887, with populist and farmer outcry as well as support for its passage from hundreds of chambers, Congress passed the Interstate Commerce Commission.

The National Board of Trade also took “progressive” positions on regulation of food and drugs (responding to the Yellow Fever epidemic of 1878). Also, as early as 1883, the New York Chamber advocated for state preservation of the Adirondack Forest and Niagara Falls (Mead, 2014, p. 125). Positions such as these are not traditionally associated with chambers today. Newark’s chamber successfully lobbied to construct a park system, and opposed plans for a new reservoir. It secured approval of a Park Commission, and the chamber president became its first president. The chamber  pressed for the construction of sewers; urged enhanced building codes on wooden residential structures; and continuously battled street railways over excessive charges and bad service. In Boston, in the midst of subway construction (1895–96), newly elected Mayor Josiah Quincy set up a city hall Merchants Municipal Committee. Composed of the heads of the city’s six major business organizations, over the next four years the committee submitted recommendations to the mayor; drafted legislation to the state legislature; drafted a tax reform; and arbitrated differences between railroads and the city/track relocation and terminal location (Most, 2014).

The Cleveland Board of Trade, reincorporated as the Cleveland Chamber, became the city’s most powerful proponent for municipal capacity-building, infrastructure and city growth. In 1897 in its annual report, the Cleveland Chamber secretary reported that “nearly all of the important propositions for [public] improvements were submitted to the Chamber for consideration and approval [and] with rare exceptions the legislative representatives, city officials, and members of the chamber labored unitedly.” Columbus’s aggressive chamber lead proclaimed: “The Board of Trade is Columbus.” The Indianapolis Board of Trade, under the presidency of Eli Lilly, drafted and secured a new charter for the city; framed and secured passage for a park commission; and hired engineers to examine and develop proposals for the city’s sewer system. The Minneapolis Board of Trade and Chamber combined efforts to overturn an adverse city council decision not to establish a park commission by going directly to the state legislature for authorization (Teaford, 1984, pp. 190–92).

The Gilded Age’s most prestigious chamber, the NYC Chamber, thought itself the national chamber. States formed state-level chambers: Utah may have been first in 1879, publishing The Resources and Attractions of the State of Utah; Louisiana and Maine’s state organization were formed in 1889; Massachusetts/Connecticut in 1890; New York in 1891; Virginia in 1892; and Ohio in 1893 (Mead, 2014, p. 132).

By the turn of the century chambers were the undisputed primary business organization and lead EDO in the Gilded Age ED jurisdictional policy system— embedded in the first as well as the second- and third-tier cities. But did other business organizations practice economic development also?

Gilded Age Big City Municipal Economic Development

Denny Tag suggests that 1888 businessmen saw boards of trade as the place to go. Nineteenth-century Big City chambers may not have been the place small business went to for assistance. Sturges’s chamber history (1915) revealed in 1858 only ten active chambers and 20 boards of trade. The chamber/board of trade explosion was a post-Civil War event. Sturges cited an 1898 national inventory of sub-state business organizations that uncovered 2930 local business organizations. A breakdown of these organizations revealed that 414 were chambers, 490 boards of trade and 838 commercial clubs and associations. Chambers only made up 14 percent.

Commercial clubs, supposedly much less involved in civic affairs, handled intrabusiness disputes; chambers, full of Big Cheeses, were heavily involved in larger civic issues/city reform; and boards of trade, populated by community-level commercial and manufacturing owners, may have dealt with medium and smaller businesses. Boards of trade were most characteristic of northern states; South Atlantic states gave a slight advantage to chambers; north/south central states were overwhelmingly “commercial clubs”; and western states were split equally between chambers and commercial clubs (Sturges, 1915, pp. 46–8). Regional variation is evident, suggesting that similar organizational types cannot be assumed as identical in function or activities across cities and regions.

Sturges states that commercial organizations improved “relations between transportation companies and the commercial interests … freight claims.” Boards of trade kept local merchants informed of foreign trade; arbitrated commercial/exchange disputes; were active in fire/accident prevention; made industrial investigations; and analyzed “the needs and advantages of their cities, and planning to acquire new factories and industries” (Sturges, 1915, pp. 49–50). Big Cities offered choices in business organizations, and a division of labor likely emerged. No comprehensive study of boards of trade exists, but I suspect they played an important role in Gilded Age ED company-level strategies and programs. Chambers captured the research and visibility. Certainly, Big City chambers advocated, lobbied and participated intensely in Big City jurisdictional political and policy processes. Possessing considerable muscle as close allies of the increasingly powerful businessman mayor, chambers advocated the formation of independent government boards and commissions whose decision-making they dominated. Chambers were heavily involved in economic development administration. A typical example is Milwaukee.

Organized in 1861 or 1869, in 1869 the Milwaukee chamber raised a special fund of $869 “to promote the city’s industrial growth.”⁸ In 1871 the Milwaukee Chamber published a collateral piece describing the city’s advantages for location of trade and industry and circulated it externally. The Milwaukee Chamber (1881) constructed and held its “Industrial Exposition”—a building costing $300,000, patterned after Philadelphia’s Centennial Exposition—to advertise “made in Milwaukee” innovations/products. Chambers, media, tourists and businessmen from other cities hustled to Milwaukee to check it out. The exposition developed into a rage as chambers in St. Louis, Chicago and Minneapolis imitated Milwaukee’s economic development innovation. Milwaukee perceived itself on a roll. In 1888 it formed a private Association for the Advancement of Milwaukee, whose program included urging the city’s real estate firms to offer free sites or free rent to new industrial ventures, and it collected subscriptions (donations to subsidize relocating firms) from the business community to fund its endeavors (McKelvey, 1963, pp. 43–4).

Exposition Fever⁹

Milwaukee’s inspiration for its exposition was the 1876 Philadelphia Centennial International Exposition, the first “World’s Fair” held in the United States. The centennial was touted as demonstrating America’s contribution to technology, agriculture and the machine. An estimated 10 million people attended the six-month event. The prime mover behind the Philadelphia Centennial was not its chamber but a motley combination of wealthy businessmen, the Republican state and local machines/city council, and the Franklin Institute. The idea originated from a Wabash College academic. The state machine secured permission from the national government in 1870 to represent the USA, and international approval followed. A Centennial Commission ran the affair.

Funding was a permanent problem; it eventually defaulted. The site and the infrastructure associated with the World’s Fair were formidable—a small bit remains to this day. The World’s Fair, functionally equivalent to the Olympics in the twenty-first century, was meant to be an economic development initiative. A number of innovative products were displayed at the exposition, including Alexander Graham Bell’s telephone (for the first time in public), Heinz Ketchup; and, of all things, it introduced kudzu as an erosion control innovation. On a positive note, a convention of librarians held at the centennial approved incorporation of the American Library Association. The centennial also spawned local historical societies that developed city histories.

Expositions, by their nature, were never pure chamber efforts; but, Philadelphia aside, chambers were lead players in the main. Each followed a theme larger than the community hosting the event, a theme that fit into the city’s image of itself. These were innovation-oriented affairs: the products and message were underscored by cutting-edge machines, technology, science and gadgets. Most involved construction of a “campus” with architecture and design prominent elements. As seen in Philadelphia, arts, education, literature and libraries took advantage of the occasion. Larger expos were also successful tourist events; in preparation, each host city “spruced up” and, in several instances, held “preparatory” events. City institutions and elites learned how to work with each other. Now mere words in a history book, expositions were emotional experiences—the city declaring itself a major place in the emerging American urban hierarchy. Expositions were physical expressions of civic patriotism, etched into the memories of residents and their families for years after.

In 1894 Philadelphia returned the favor and copied Milwaukee. Philadelphia’s city council built a “Commercial Museum” that displayed the area’s products, and developed collateral material to support its path-breaking foreign trade strategy. Forming an international advisory board, the museum’s purpose was to develop export trade by supplying manufacturers with commercial information and statistics—and product displays at the museum. This is a prototype World Trade Center. The city, working with the University of Pennsylvania and with money raised by business, opened the exposition in 1899, hosting a commercial congress attended by delegates from most of the world’s major countries—a reverse trade mission (Sturges, 1915, pp. 73–5). In short order, San Francisco, St. Louis and Boston built similar museums (McKelvey, 1963, p. 43).

Expositions continued into the Progressive Age. The Buffalo 1901 World’s Fair was by far the largest, but smaller exhibitions such as Boston’s 1913 Chamber Industrial Exposition marketed New England-based products and manufacturers. For that event the chamber published New England: What It Is and What It Is to Be (French, 1911).

Attraction and Promotion

The infamous “boosterism” said to characterize chambers is most accurate for western and southern chambers. The booster attraction and promotion campaigns in the North and Midwest mostly originated from railroads, boards of trade and separate tourism agencies, rather than pre-1900 Big City chambers.

The chamber approach to economic development, aside from infrastructure, was distinguished by its focus on marketing and advertising, which were essential strategies for corporate survival and growth. This is the core of chamber boosterism. To chamber leadership and staff, expanding the community’s base of firms, adding manufacturing firms in particular, was the natural strategy to grow the community and ensure its ability to compete in a world in which communities competed for residents, firms and exports. New York City and “windy” Chicago competition was real; nearly every Big City, like today’s hometown sports team, had a rival.

As to technique, Gilded Age chambers were sophisticated. Business surveys seemed common, and a consultant industry developed to develop/administer them. Surveys produced a prospect database; chambers devised a manual prospect management system. A sense of the proper municipal business climate had also evolved, and that was played up in promotional literature. Community advertising campaigns were common and research/data, based on the census, evident. Direct mail and the use of radio were also evident by the tail end of the nineteenth century. Chamber attraction programs were not “amateur hour.” How collateral material got to the prospect is less clear. Railroads no doubt played a role, as did advertising in newspapers and magazines. Regional variations in chamber promotion were huge; western and southern chambers were more aggressive and, pound for pound, appear more successful. Eastern and midwestern chambers did not recruit from western and southern communities because there was very little to steal in these newly forming economic bases. Instead, they advertised in fellow Big Cities. Most communities played by the informal Victorian-era rules. That changed when southern jurisdictions visited Big City firms— that was not how the game was supposed to be played.

Throughout the late nineteenth century … promotion of cities in the South and West was largely the result of individual initiative, drive and profit-seeking. Urban land speculation was limited in the already established cities of the East and Midwest. (Mohl, 1985, p. 73)

The real estate focus of these early recruitment efforts strongly suggests that sites were either identified or actually created. Financing for real estate, not machinery, was supplied by member banks and informal, Denny Tag-like investor groups. I strongly suspect that actual sites were informally located by chamber members, and that the process, if carried out today, would generate a New York Times series and thousands of critical academic articles. Chamber real estate activities were undoubtedly played “close to the vest”—insider, favorites-based and profitable for those able to tap into chamber projects. More or less informal, site selector consultants operated at the time. The Baltimore Manufacturers Record had been established in 1883, but that industry did not truly take off until the 1950s when Conway became prominent.

Tourism

Turn-of-the-century tourism promotion employs tools and techniques discussed thus far—privately designed and financed. Railroads were in charge. They financed and distributed media advertising, posters and collateral material of the age. Nineteenth century tourism promotion centered on resorts that sprung up along the Atlantic Coast. Seaside resorts were initially popular in Britain, where they enjoy a long history. During the Gilded Age, British and European upper classes flocked to America’s seaside resort cities. Newport (for the truly rich), Nantucket, Martha’s Vineyard, Cape May New Jersey and Atlantic City attracted clusters of resorts, hotels and mansions. Adjacent as most were to big Eastern cities, these resorts were ideal for the middle, but especially for the upper class to get away from the hot, smelly city during the summer. The connection between Big City and seaside resort was the railroad. The queen of seaside resorts was indisputably Atlantic City: “Atlantic City, before the emergence of Florida, or Las Vegas or southern California as mass holiday locations, undoubtedly dominated American tourism” (Ward, 1998, p. 41).

By1909 Atlantic City had become the world’s most visited resort (overtaking Britain’s Blackpool), attracting 8 million visitors. Founded in 1854, Atlantic City was a classic East Coast example of railroad land speculation and city-building. The idea of Atlantic City as a health resort is credited to Dr. Joseph Pitney, “the father of Atlantic City,” who was partnered with affluent and well-connected business entrepreneur Samuel Richards (Johnson, 2010). Atlantic City, favored by a location crisscrossed with multiple railroads, owed its existence and fate to no railroad monopoly. A government and business/tourist partnership operated promotional campaigns independent from the railroads as early as the 1870s. Hoteliers raised funds for advertising campaigns, and in 1870 America’s first “boardwalk” opened up (piers followed, including the famous 1898 Steel Pier in Atlantic City).

Atlantic City’s dominance was no accident. It always blazed its own path, separating itself from other seaside resort cities (branding, dare we say). In 1906 the Atlantic City Publicity Bureau—a joint venture of its Board of Trade, Hotel Men’s Association and Business League—came into existence. The Publicity Bureau lost no time in branding Atlantic City as “America’s Greatest Resort.” Lest we exaggerate, the Bureau was never solely responsible for the hordes who vacationed at the “playground of the world.” Railroads, steamships and even trolley lines joined in heartily. Local travel bureaus flourished in America’s Big Cities due to Atlantic City. Tourism promotion was never limited to coastal resorts. It was a core economic development strategy in most Big Cities during the Gilded Age; tourism usually came in the form of a convention.

Indianapolis is the first documented convention-related activity by a Big City chamber/board of trade (Mead, 2014, p. 132). In a letter from Eli Lily in 1892 to the CEO of the Indianapolis Commercial Club (founded by Lily in 1890, Lily gushed his congratulations for the Commercial Club’s successful recruitment of the Grand Army of the Republic (GAR) convention of that year. Lily himself was chair of the 1893 GAR, so I suspect he helped things along. Apparently, over 300,000 visitors poured into Indianapolis, and the financial surplus generated by the convention allowed the Commercial Club to fund what Mead believes was the first permanent Convention and Visitors Bureau. I would not be shocked, however, if chambers, boards of trade and commercial clubs had been involved in tourism and conventions a decade or more earlier.

Tax Abatement and Deal-Making

Chambers didn’t invent tax abatement, and the reader shouldn’t assume that chambers connived to wheedle abatement from an unwilling government—municipal and state governments knew that tax abatement is what they brought to the deal. Chambers were likely more adverse to abatement in that their members paid taxes without abatement. Chambers, however, were also sensitive to the dangers of competing communities. So tax abatement, although not built into deal-making as it is today, became more likely when a relocating firm was perceived to have mobility opportunities—or was needed to fill some perceived need. Other tax exemptions were meant to startup a company: they burned off after a period of years; still others were based on the perceived need to compete for firms from other states—the inspiration for abatement was, at the least, formally authorized by the state. States/localities gravitated to “targeted incentives.” An example would be New York’s 1880 abatement of capital stock tax to, among others, “manufacturing corporations carrying on manufacture within the state.” The reason New York is cited for this abatement was “the desire on the part of the State to bring within its borders the advantages which attend the maintaining of large manufacturing establishments and the employment of many men therein.” Pennsylvania, presumably losing firms to New York, copied this legislation in 1885. The Pennsylvania Supreme Court legitimized the legislation, its rationale being that:

laws had been made in adjoining states which gave encouragement to the establishment of factories by exempting them from certain forms of taxation. The mischief to be remedied was the danger that such legislation might lead to the removal of capital and labor from this state to others, to the detriment of the business and the prosperity of our own.¹⁰

The topic of wars between the states caused by tax abatements and incentives will periodically appear in several future chapters. But it should be clear at the outset that competition with neighboring states was the principal trigger for tax abatement in the nineteenth and early twentieth century. Tax abatement in those years was in no significant way prodded by southern aggression or textile wars. A study of abatement for the nineteenth century has yet to be attempted.

CITY-BUILDING INNOVATION: PLANNED COMMUNITIES

Since the Gilded Age cities were built from scratch to impart values, shape lives and behaviors or to house a firm or jurisdiction’s workforce—sometimes both. The “planned community” is an element of social control in this; either that or a desire to reform society, economy and/or politics—there are examples of both to be discovered. Going way beyond a simple grid, profit motives of real estate speculators, railroad development, city-building booster elites and religious or socialist communities, there is literally a “plan”—or at least an image of the final result. The planned community is congruent with the era’s “physical” paradigm. Planned communities came in forms congruent with each of our two ships, Privatist and Progressivist.

Privatist initiatives tend toward “worker control”—in the Gilded Age to prevent unionization, an accessible and pliable workforce laced with capitalist “do good” altruism. Progressive Planned Communities—more highfalutin’ in their aims, and more profound in their philosophy—rejected the Big City as a proper environment for a family and sought, in these years, to recreate the natural environment of the old village: an environment that diverts stressed immigrants from violence and social revolution. Planned communities are a distinctive approach to city-building. In this section, I will discuss two forms of planned community city-building which appeared in the Gilded and Progressive Ages: the company town and the garden city.

The Company Town

Traditionally, company towns are associated with rural communities dominated by extractive industries, and housing poor folk who happily sing Tennessee Ernie Ford’s “Sixteen Tons.” Examples like Carolina “mill towns” were consciously set up to house the workforce for new textile mills (discussed in the next chapter). These planned communities are undisputedly Privatist in nature; but even Privatists pursue moral and individual empowerment through values/family/behavior change.

The first major example (1880s) of such a company town was built by George Pullman (Pullman Palace Car Company), securing a location 12 miles from Chicago’s CBD loop (now part of Chicago’s South Side, one of the city’s 77 community areas). Pullman, with the best of intentions, established a “suburb” to provide suitable, clean and affordable worker housing adjacent to his car factory.¹¹ Employees in his factory were required to live in the housing. His ideas on how people should live their lives, the values and behaviors they ought to practice (no alcohol), thoroughly permeated his housing endeavor. Like most good intentions, things didn’t work out. In 1894, during a great Panic, worker and union resistance to large-scale layoffs/wage cuts culminated in the bloody Pullman Strike. Federal troops crushed the strike. In 1896 the Illinois Supreme Court required separating Pullman ownership from the municipality. Chicago in 1889 annexed major portions of the suburbs, and within a decade bought the rest.

Along the same lines, in 1891 lumber king Turlington Harvey started his own suburb, Harvey Illinois. Modeling his designs after Pullman, he actively promoted his housing model to factory owners and workers who shared his evangelistic Protestant values. Harvey was a “temperance town,” and social reformer Susan B. Anthony lectured there. The religious tone and temperance were soon repudiated in an 1895 referendum. The city somehow prospered, and today is a Chicago suburb of 25,000 residents. Another example of Chicago-based corporate city-building was the 1906 United States Steel Corporation’s founding of Gary Indiana—initially home for its Gary Works factory. US Steel acted more as a developer than a reformer in this city-building endeavor. The original plan created a grid-based, privately marketed city of hopefully 200,000. In 1960 Gary housed nearly 180,000 residents, but in 2010 only 80,000 remained. With surprising frequency company-planned city-building sprang up across the United States after the twentieth century’s first decade. These second-wave projects were consciously planned communities complete with architects and plans intent on Progressive-style social welfare and industrial relations. Perhaps the first example was the 1915 Indian Hills-North Village Massachusetts built by the Norton Grinding Company (Crawford, 1996). Others followed: Carnegie Steel and McDonald Ohio,

Hershey PA, Alcoa Tennessee, Sugar Land TX. Some were quite successful; labeled “satellite cities” by urban scholars, they appeared mostly in the South and West— Birmingham Alabama, for example, but also Lackawanna New York (Green, 2010). Sporadically, they still appear (Lake Buena Vista, Disney World and Ybor City cigars); occasionally they appear in the news, such as when Millinocket in Millinocket Maine closed down (2014). Several hundred company towns still exist at the time of writing.

The Garden City Movement and Frederic Howe

The garden city is credited to Sir Ebenezer Howard, a Brit who in 1902 founded the first real garden city, Letchworth (England). Howard shockingly named his suburban development “Garden City,” with the name supposedly derived from Chicago’s motto, Urbs in Horto (City in a Garden). Howard’s path-breaking book of 1898, To-Morrow: A Peaceful Path to Real Reform, was retitled Garden Cities of To-Morrow in its 1902 reprint (Rybczynski, 2010, p. 30). The defining characteristic of the garden city was its rejection of the central city/industrial city as the preferred community of the industrial age. “The function of Letchworth and the garden cities that followed—indeed their chief attraction—was to serve as alternatives to the crowded industrial city. (Rybczynski, 2010, pp. 31–2) This rejection is fundamental to this city-building strategy.

Howard’s garden city, a giant leap forward for urban planning, evolved into the Garden City Association, which morphed into Britain’s Town and Country Planning Association (TCPA). Progressive Era linkup of garden cities with America came through several reform Progressives, notably Frederic C. Howe. Howe believed the garden city to be a break with the Privatist City Efficient, and he characterized the garden city as more than a rejection of the industrial city. Howe saw the garden city as a complete repudiation of the nightmare of private profit at the expense of human well-being.

Howe was an interesting fellow whose impact and prominence has been lost in the mists of American history. A student of Woodrow Wilson at Princeton, he earned a PhD, became a lawyer and joined a Cleveland law firm. He quickly became secretary of that city’s Municipal Association and then served a term on the city council (1901-03) working with social reform mayor Tom Johnson (and participating in Cleveland’s City Beautiful initiative). That began an off-and-on political career.

Influential in Cleveland’s hiring of Daniel Burnham (and his “Group Plan”), Howe wrote several influential works and dozens of articles. Moving to New York City in 1911, he was a principal founder of the National Progressive Republican League dedicated to the election of La Follette. Howe also served in both the Wilson administration and in FDR’s Agricultural Adjustment Agency as a special advisor to Secretary of Agriculture Henry Wallace (FDR’s future Vice-President and later a presidential candidate). Howe in the course of his life infused direction and content into urban planning, and his writings encapsulated core principles of what would become a wing of American community development.

Howe saw the garden city as a more humane urban form created through planning. His was not an attempt to reform the industrial city; he intended to replace it with his garden city suburb (Boyer, 1986, p. 41). His garden city did not merely integrate nature with human residence; it substituted planning for private profit. Howe believed he could create a new urban form built without the destructive features injected into the industrial city by profit and developers. The evils and human depravities created by the industrial city were “economic in nature,” creating a physical landscape that dehumanized its residents.

We have generally assumed that the city problem was a personal one: that it was a problem of men, of charters, of political machinery … Reform has been directed to securing efficient honest officials [the city efficient movement and anti-machine reform] … The city problem [however] is primarily an economic not a personal problem … The health, comfort, convenience, happiness of the people is intimately bound up with the material side of the city. Much of the poverty is the product of our neglect to control the economic foundations of the community. The houses we live in, the streets … distribution of wealth, the cost of living and the vice and crime of the community … are intimately connected with the way the city is built. (Howe, 1912, p. 590)

Remove the profit distortion, substitute a plan which ameliorates the ills of the industrial city, and the reader has Howe’s recipe for a “sustainable” urban form: the garden suburb.

A million men are thinking only of their individualist lot lines, of their inviolable right to do as they will with their own, irrespective of its effect on the community. We do not think beyond our own doorsteps, we do not think in city terms. We have exalted the rights of the individual above the common weal. Our cities have been permitted to grow with no concern for the future and with no thought of the community or the terrible costs which this uncontrolled development creates … Our cities have been planned by a hundred different land owners each desiring to secure the quickest possible speculative returns … Streets are worthy of as much thought as a cathedral, which is to endure for centuries … Every bit of land should be allocated and planned by the city rather than by the owner, in order to insure the harmonious growth of the community. (Howe, 1912, pp. 590–91)

It was left to others—Marsh, Atterbury and Frederick Law Olmsted Jr.—to design and construct Howe’s first American garden city concept: Forest Hills Gardens in Queens, New York. Started in 1908, Forest Hills was funded by the newly created Russell Sage Foundation, which earmarked one-sixth of its endowment to the project. With no restrictive covenants, the 142-acre site, linked to Manhattan by the Long Island electrified rail (a 15-minute ride from Penn Station), plans projected a population of 5000 housed in mostly detached single-family homes, with apartment buildings, row houses and twins. The town square was the commercial center, behind which was a village green with curvilinear tree-lined parkways that “snaked their way” to the periphery: “The overall effect recalls a medieval Bavarian town” (Rybczynski, 2010, pp. 33–6).

Similar style garden cities were constructed over the next several decades.¹² From these garden city experiences, a “new planned cities’ FDR New Deal initiative carried the planned communities strategy to its next level.

SHIFTING ELITES: PROFESSIONALIZATION AND REMAKING OF CHAMBERS

At precisely 12:01am on January 1, 1900 the Gilded Age ended, the Progressive Age began and ED paradigms shifted. It was quite dramatic, except no one noticed at the time—hangovers, inertia, myopia and all that. But “things” did shift around. Over the next few years America entered into one of its most spectacular periods of change— change that we live with today. The twig got bent yet again. Whatever else it was, America had entered the modern age, and we are now stepping across the threshold of modern, but not yet contemporary, sub-state economic development. For us this “Progressive Age” lasts through World War I (1919 or so). We cannot discuss “everything” at once, so the first Progressive Age topic addressed is the shifting of business elites and its consequences to sub-state economic development.

Thus far this history has presented a picture of sub-state economic development disproportionately shaped by various categories of business elites operating within municipal policy systems to confront changes unleashed from our three drivers. During the Progressive Age, municipal policy systems radically change, in large measure due to the activities and values of these business elites, as well as the digestion or incorporation of new “classes” of voters and workers into policy-making. The shifting of business elites came early in the Progressive Age, and it left in its wake a dramatically different set of municipal economic development players—leading to a municipal government “capacity” revolution—that will set the stage for a new burst of change.

New York City Chamber of Commerce

New York City is home base to turn-of-the-century American chamber evolution. The nationally prestigious New York City Chamber, led by the upper crust of America’s corporate capitalism (with some old money tossed in for good measure), thought of itself as the national chamber of commerce. It therefore figured prominently in national issues, federal and state government, as well as continuing to check Tammany and, to the degree possible, shape municipal policy and key economic development initiatives (such as the subway). Despite its importance, it would be a mistake to think of the New York City Chamber as a bureaucratic powerhouse. Mead describes George Wilson, whose tenure as secretary lasted 40 years (1868–1908), as “a skilled butler, more than a master of the house. Although Wilson produced excellent transcripts and summaries of chamber meetings, his name rarely appeared in the annual report” (Mead, 2014, p. 167). New York City Chamber’s power rested on its board of “one percenters”—not a powerful staff.

During the 1890s the city’s chamber raised membership to 1250 firms (raising it again to 1500 in 1900): “The problem with this chamber, for all its glittering history and achievements, was that it was too exclusive.” The chamber, in no way, could be considered as representative of the city’s overall business community: “John D. Rockefeller might be happily ensconced in his chamber of commerce, but what organization could the average businessman join so as to make contacts and to make New York a better place? (Mead, 2014, p. 174). By 1900 other elements of the business community wanted to play ball—but they had no place to do so.

The NYC Chamber shared turf with several boards of trade, the Harlem, Staten Island, Italian and Spanish chambers, and the Booker T. Washington Negro Business League. Despite these alternatives, in 1897 a new organization was formed: the New York City Merchants Association. The rise of a new structure repeated itself across the nation. The Merchants Association developed alongside the brand new (1898), consolidated five-borough New York City; its motto was to “to foster the trade and welfare of New York [City].” At its founding, the Association hired S. Cristy Mead as its first secretary. Mead, taking advantage of the NYC Chamber’s fixation with its national role, grew the Merchants Association into the city’s premier business organization. In one form or other, a new-style chamber of commerce had abruptly emerged, and blossomed across the nation. The turn of the century “was a time in which a new vigor seemed to animate business organizations, with business men’s leagues … coming to such communities as St. Louis, Sacramento, Birmingham, Atlanta and Houston” (Mead, 2014, p. 154).

Old-Style Chambers Shift to New Style

Not only did new-style “Merchant Association” chambers form, but an even more unsettling phenomenon slammed the old-style corporate elite chambers. The community’s “biggest of the big” corporate leaders pulled away, becoming less involved personally and financially in local chambers. A significant change in the composition of chamber membership resulted from reduced involvement of the jurisdiction’s top echelon corporate elite. Possibly increased industry concentration and nationalization of corporate market areas prompted large firm CEOs to withdraw from local chambers? Perhaps they shifted attention to national issues and towards forming a national, Washington DC-based chamber? Theodore Roosevelt (TR)—the trust-buster—was President, and the Progressive Movement had seized hold of national policy-making. Politics, policy and the economy were more national than ever, and top corporate leadership arguably moved with the new geography of power.

Big Cities, as well as second-/third-tier city chambers, reeled. Seeking revenues to replace lost corporate dollars, chambers conducted membership campaigns aimed at the general business community. Financial stress and the desire to attract small business compelled rival business organizations to consolidate into the chamber. During the Progressive Era, boards of trade, trade exchanges, businessmen leagues and commercial clubs merged with chambers. Consolidation enhanced chamber social and networking functions, and required a new set of programs reflecting new ideas, demands and goals.

The business community ED landscape changed radically during the first two decades of the twentieth century, dramatically altering nineteenth-century jurisdictional policy priorities. While still dominant, the chamber was “not your father’s chamber.” The business community wanted to remake city hall in its image, focus intensely on local concerns and professionalize the chamber. Professionalization encouraged chamber bureaucratization, establishing a structure to formally administer ED programs (industrial bureaus) and “spin off” tourist bureaus and chamber-owned industrial sites into subsidiaries. New-style chamber governance took heed of the competitive urban hierarchy, and economic development, as a policy area, garnered a more robust commitment. What’s more, in many cities across all regions chambers became primary local operatives for the community’s Progressive Movement.

Change required an increased reliance on a chamber secretary-CEO.¹³ The shift from control by board to a CEO-led staff was fundamental to the chamber’s evolution. The career of Ryerson Ritchie describes the rise and role of the new chamber secretary during these years; it will also expose the dramatic changes chamber secretaries made. Ritchie’s career played out between 1893 and 1912, during which time he served as chamber secretary in Cleveland, Detroit, Boston and San Francisco. If anybody personified Big City chambers in this era, it was Ritchie.

Ryerson Ritchie: New-Style Chamber Leadership

Ritchie hated boosterism.¹⁴ He argued that: “instead of talking about being the best [American chambers should strive to] become the best. They should organize and make their communities so advanced, so well run, that people and business would naturally flock to them” (Mead, 2014, p. 170). Ritchie advocated Progressive initiatives, including municipal structural reform (commission and city manager forms of government). In each city Ritchie served, he aggressively consolidated other business organizations into the chamber:

Cleveland in 1893 the Committee on the Promotion of Industry coming together with the Board of Trade, in Detroit in 1903 five different groups coalesced into the Detroit Board of Commerce; in Boston 1909 the Merchants Association and the Chamber of Commerce joined, and in San Francisco in 1911, the Merchants Association, the Merchants Exchange, the Downtown Association, and the Chamber of Commerce combined. Along with consolidation came an explosion in chamber membership. In Boston, for example, he merged the Chamber (1,000) with the Merchants Association (1,800) and then campaigned to increase the combined entity’s membership to 4,500—by 1911 only two years later. (Mead, 2014, p. 171)

Internal chamber structure changed radically. In Cleveland, Ritchie set up 82 committees with 450 members—signaling non-elite, broadening of chamber involvement in local policy-making. In Boston, he organized 62 committees with volunteers the like of Louis Brandeis, Edward Filene (department store owner), James Storrow (a founder of General Motors) and Olmsted (who led a committee fighting railroad freight discrimination). The program changed as well. Embracing big local issues such as municipal reform (city manager, budgeting and planning), Ritchie put the chamber foursquare behind the City Efficient and City Reform movements. Even smoke abatement (pollution reduction), workplace safety (in line with Roosevelt’s Progressive agenda) and corporate philanthropy were aggressively advocated. Ritchie’s Big City chambers became instruments of the Progressive agenda and locally directed Progressive change.

What was new about Ryerson Ritchie? The great New York Chamber had pioneered the idea of a few committees, each with a few good men, working on a few civic projects. Ritchie democratized that vision and made everyone in business a potential reformer. Thousands of eager business people could pool their energy and turn their cities … into Utopia. (Mead, 2014, pp. 171–2)

In the eyes of Kenneth Sturges, Ritchie established the first “modern chamber of commerce” in Cleveland. The Cleveland Board of Trade reorganized in 1898 to become the Cleveland Chamber of Commerce, whose purpose was to engage in “civic work.” Ritchie, its first secretary, developed a solid phalanx of committed, socially responsible businessmen on his board of directors. Many previously served on the old board of trade’s Committee on the Promotion of Industry, during which time they advocated involvement in behalf of the business community. A statewide Conference of Chambers (Ohio State Board of Chambers of Commerce) resulted in 1893. Ritchie then consolidated Cleveland’s various business organizations into the chamber (Sturges, 1915, pp. 137–47).

Working with social reform mayor Tom Johnson (1901–09), the chamber and its secretary attacked the problem of Cleveland’s slums, forming a committee on housing conditions in 1902. State and local approval of the city’s first building code resulted. Subsequent state approvals, also with key chamber involvement, expanded city powers to condemn and raze non-conforming structures. A special committee was formed to approve bond referenda to develop three bathhouses; another chamber committee led to a citywide system of playgrounds and recreation centers. In 1904 the chamber led, unsuccessfully, comprehensive school reform. Yet another chamber committee aggressively pursued river and harbor improvements. In 1906 the chamber formed a committee to work with the city on the troublesome streetcar system (Sturges, 1915, pp. 137–47). In the next chapter, the reader will see this agenda very closely mirrored community development’s agenda of that period. In Cleveland, at least, Progressivist CD had taken over a chamber.

The New York City Merchants Association (as well as other Big Cities) copied Ritchie’s innovations in management, membership and structure. NYC’s Merchants Association membership recruitment relied on civic pride and a commitment to give back to the community as a centerpiece experience in being a chamber member: “Are you doing your share? … Hundreds of recruits to fight for New York” (Mead, 2014, p. 174). The Merchants Association’s first president, S. Cristy Mead, described the “modern” chamber of commerce as the “expression in commercial community affairs of the operation of the law of cooperation, and coordination of effort on the part of individual units for greater efficiency in the accomplishment of results of benefit to the community.”¹⁵

Professionalization of Chamber Leadership

Chamber professionalization did not confine itself to eastern and midwestern Big Cites.¹⁶ It was national, across cities of all sizes. Perhaps, the most widespread expression of professionalization was the establishment of state associations of chamber secretaries. Texas was one of the very first (1906), followed in the same year by the Inter-State Association of Chamber Executives (New York, Pennsylvania and New Jersey); the Southern Commercial Secretaries Association (1907); the Central Association of Commerce Secretaries (1909); and the Associated Chambers of Commerce of the Pacific Coast, Oklahoma (1909) and Michigan (1912).

The next step in chamber professionalization was the founding of the US Chamber of

Commerce in 1912. Previous to 1912, the New York City Chamber had served as the de facto national chamber. The catalyst for establishing a national chamber came from Presidents Roosevelt and Taft. Having established a cabinet agency, the Department of Commerce and Labor (1903), both Presidents and their Commerce and Labor Secretaries believed the department needed a private national counter-party to formulate and implement policy. Taft took special interest, and his Commerce and Labor Secretary, Charles Nagel, pursued it aggressively. In December 1911 Taft addressed Congress and argued that the nation needed a national chamber; shortly after, Taft sent 2000 invitations to chambers to establish a national chamber at an April 1912 meeting. Some 600 showed up, elected Harry A. Wheeler (former president of the Chicago Association of Commerce) as its temporary chair and approved the formal establishment of the US Chamber of Commerce. Within 18 months, the US Chamber attracted 500 organizational members, and by 1920 a budget of $ 1.3 million (Mead, 2014, pp. 191–6).

The US Chamber was a top-down, policy-focused organization. Local chamber secretaries required their own professional entity geared to their needs of managing sub-state chambers. Given the intense state-level organization that had occurred over less than a decade, they were inspired to create a national professional entity as well. Working with the US Chamber, two large multi-state entities (East Coast American Association of Commercial Executives and Midwestern Central Association of Commercial Secretaries) met in 1914 and consolidated into one entity, the National Association of Commercial Organization Secretaries (NACOS).¹⁷ Its first president was S. Christy Mead, former secretary of the New York City Merchants Association. In 1915 the US Chamber created its Organization Service Bureau to work with and jointly coordinate the two organizations and share US Chamber resources (Mead, 2014, p. 196).

Finally, the chamber movement developed its own Policy World. Several chamber histories were produced in this period,¹⁸ the most significant of which was Kenneth Sturges’s American Chambers of Commerce (1915), and in 1920 NACOS published the 467-page Commercial Organizations: Their Functions, Operation and Service. In 1913 Paul Cherington, a Harvard University professor, announced the Harvard Business School Project, whose purpose was to train chamber secretaries to “give them a practical knowledge of how they can do what they are organized to do.”¹⁹ Other colleges such as Dartmouth, the University of Michigan and the University of Chicago followed suit. The US Chamber introduced its publication, Nation’s Business, and several popular monthlies linked to chambers and chamber activities followed (for example National Municipal Review, Town Development and The American City). The American City in 1917 presented a two-week course for chamber executives which 90 individuals attended (Mead, 2014, p. 198). Also, Junior Chambers of Commerce were first created during this decade.

Industrial Bureaus

Professionalization affected ED directly in the form of the “industrial bureau.” Industrial bureaus were departments or subordinate units whose function was to construct, operate and manage industrial parks as sort of “shovel-ready” locations for new industry and business to relocate or expand in. Big City chambers expanded the mission, hired staff and allocated substantial resources to include formal attraction/retention programs. Industrial bureaus became commonplace in the early years of the twentieth century. Consider the evolution of the Scranton Pennsylvania chamber. Resulting from an 1867 meeting in a grocery store, the Scranton Merchants Association formed to “encourage the economic growth of the city.” The Association—later renamed the Scranton Board of Trade, then Scranton Chamber of Commerce and in 1914 the Scranton Chamber—formed a subsidiary Industrial Development Company that operated the chamber’s ongoing economic development programs. Even second-/ third-tier municipalities by World War I had developed industrial bureaus. By the 1920s, industrial bureaus served as the lead agency of most jurisdictional ED programs; their staff were the principal sub-state economic developers of the era.

What was the typical chamber approach to early twentieth-century economic development? Chamber involvement in economic development reflected their organizational conviction that chambers possessed the best judgment as to how communities could benefit from private sector economic growth. Chamber access to business skills, acumen and techniques meant they knew that dynamics of firm profitability could be tapped to secure the larger community purpose. Manufacturing firms were their principal target, and Big City chambers, already sensitive to dependence on agglomeration, searched for a productive mix of businesses and business sectors to create a balanced (i.e. diversified) economic base.

Industrial profitability required, beside market demand, a physical presence (building or facility), machinery, low-cost labor, presence of critical skills, access to transportation modes and financing. If a labor market existed, then the principal needs of business were financing and real estate related. Chambers could recruit a workforce when needed. Community-level business climate always mattered in the chamber mentality. Low taxes were always a favorite—so tax abatement was important. Having a shovel-ready facility or site was a central tool in their attraction strategy. This, of course, meant working with the real estate exchanges. Economists labeled it the “cost-reduction” approach; academics subsumed it into a “first-wave” approach to economic development.

We know that by 1928 community “bonuses” or incentive packages were widespread, but controversial. A survey conducted by the American Industrial Development Council (AIDC) (Denn, 1961, p. 9) identified 102 cities that had developed some form of bonus/incentives (seven types of bonuses were discussed). The US Chamber prepared a summary of industrial development activities in 1926 for 87 cities that included 618 firms, of which 302 were financed locally; 130 were of local origin with outside capital; 98 were branch plants; and only 88 were removals (relocations) (Denn, 1961, p. 6). That meant retention was the more prominent Big City chamber strategy. Relocations were about 15 percent of annual chamber activity.

The Industrial Park

The earliest known American industrial park—located in Passaic New Jersey—was started by Alexander Hamilton and some wealthy cronies in 1791 (Eisinger, 1988; Peddle, 1993). Hamilton, chronically interested in manufacturing, believed urban areas were where it would best prosper. Anyway, industrial parks in some form have been with us from the very beginning of our nation, although they were less common in the nineteenth century.

Much of early manufacturing was located on single-site developments on waterfronts, along rivers and bodies of fast-moving water. As the early industrial city expanded, manufacturing moved to periphery areas. Manufacturing facilities were not especially good neighbors; so, in an era of walk to work or catch a streetcar, only short distances separated work from residence. The haphazard location pattern of manufacturing was a prime reason zoning advocates in the early years of the twentieth century were so successful. Peddle defines an industrial park as “a large tract of land, subdivided and developed for the use of several firms simultaneously, distinguished by its shareable infrastructure and close proximity of firms.” He observes that the industrial park “accentuates the compatibility of the industries found therein” (Peddle, 1993, p. 168); or, in other words, that an industrial park establishes covenants, design standards, subdivision requirements and zoning restrictions to ensure that future development of the park does not inflict unnecessary land use issues on occupants, and preserves the investment value.

The first known planned “industrial estate,” Trafford Park Estate, was built in 1800 Manchester (England) along the Manchester Ship Canal (Beyard, 1988, p. 13). Trafford Park remained the world’s largest planned industrial estate through 1950. Conventional wisdom has it that the Adam and Eve of modern American industrial parks descended from the Chicago Clearing Industrial District (1899–1900) founded by Ogden Mills and the Isham family.²⁰ The Clearing Industrial District was a real estate innovation, not a spinoff from rail activities. The 500-acre park first revolved around rail and cattle classification yards, but by the 1920s benefited from the nearby construction of Chicago Municipal Airport—by 1948 the Clearing Industrial District had added 1300 acres to meet airport demand.

Contemporary with the Clearing Industrial District were two other pioneering Chicago districts: Original East District—260 acres situated along the railroad, adjacent to the Union Stock Yard, 3.5 miles from Downtown Chicago (complete with its own electric generation facility); and Pershing Road District (1916, with a greenbelt). The two parks were railroad-related investments and the latter, adjacent to a highway, served as an early multi-modal center. Common to industrial parks in this period was a gridiron layout that provided access rail access to each parcel, and generated congestion at grade rail (level) crossings (Beyard, 1988, pp. 13–18).

The same turn-of-the-century time period also saw the development of the North Industrial District in Kansas City and Industry City, a part of the Bush Terminal in New York City … Rail service was a central feature of the parks … Building on these early successes, railroads themselves entered the industrial park business during the 1920s and 1930s. (Peddle, 1993, p. 109)

In 1922 the owners of the Chicago Central Manufacturing District constructed the original Los Angeles 280-acre Vernon District. Eventually acquired by the Atchison, Topeka and Santa Fe Railroad, the district became part of the huge Los Angeles Central Manufacturing District. In this early period, industrial parks were “developed entirely by private interests (often railroads in the early days) without public subsidies”  (Eisinger, 1988, pp. 177–8). My research indicates that northern/midwestern industrial bureaus operated industrial parks during the 1920s and 1930s—most industrial bureaus spun them off into privately owned/operated parks. My unconfirmed suspicion is that many such industrial parks were essentially private investments housed within the chamber apparatus. With professionalization and Progressive leadership this relationship might have been “too close” to survive scrutiny. Still, a 1928 AIDC survey revealed that many chambers still supported industrial parks.

Industrial parks owned and operated by governmental EDOs first occurred in the early 1940s, owing their existence to the transfer of former military bases to local public entities and jurisdictions (Chico, California is an example).²¹ Today the usual public entities are cities and counties. State participation is uncommon; only a dozen states maintained industrial park programs in 1985; all but four of the states limited involvement to planning and development, relinquishing ownership and operation to the private sector municipalities. New Hampshire was the first state to create an industrial park authority in 1955 as a companion to its pioneering direct loan program. As late as the mid-1960s most industrial parks, as demonstrated by an Urban Land Institute (ULI) survey of 250 such parks, remained privately owned and operated: the survey found that only one in five was “developed with public assistance.”

BIG CITY “FIRST WAVE” CHAMBERS

Ted K. Bradshaw and Edward J. Blakely in their seminal article on ED “waves” assert that:

The first wave was dominated by programs designed specifically to attract footloose firms from old industrial areas to growing regions such as the South or West. The typical tools of the first wave were subsidized loans or direct payments to firms for relocation expenses, tax reductions, subsidies applied to the cost of plant facilities or utilities, and competitive and expensive industrial recruitment programs. (Bradshaw and Blakely, 1999, p. 230)

This history strongly asserts that this conception of our profession’s/policy area first historical period is at best an abridged synopsis of what actually happened in the pre-World War II years.

What’s Left Out

By no means do we deny that “subsidized loans, tax reductions, site assistance and competitive industrial recruitment programs” were characteristic of these periods—we have gone to considerable lengths to demonstrate they were. Also, I have persistently argued that concern with competitive urban hierarchy prompted chamber-led economic developers to provide subsidies and ED assistance to “footloose” as well as existing expanding industries. Our criticism is that First Wave conceptions isolate one element of First Wave sub-state economic development—and ignore the great majority of ED strategies/initiatives carried out in these years. Moreover, the implied attraction aggressiveness borrows more from southern and western chambers—ignoring that hegemonic northern and midwestern chambers had little to attract from other regions considering most prospects were their branch facilities. Also, early community development strategies are completely ignored, even when pursued by Big City chambers.

Although we are less than midway through the Progressive Era—decades from the 1920s and Depression years which are also considered First Wave—it is obvious to me at least that the predominant economic development strategy in northern and midwestern Big Cities was infrastructure, particularly transportation infrastructure. The next chapter includes the City Beautiful movement, the “golden age” of CBD physical development. Shortly in this chapter, the aggressive leadership of chambers in the development of municipal, Big City policy systems through structural reforms may arguably be chambers’ most important contribution to modern economic development policy in this period.

There is more to First Wave economic development as a profession or policy area than a single-minded pursuit of attracting footloose firms with expensive subsidies and recruitment programs. Chambers and their industrial bureaus were important, but not primary chamber economic development initiatives. That’s why they were spun off to industrial and tourism bureaus. Indeed, as we describe industrial bureau practice in the paragraphs that follow, tax abatement was as pervasive then as it is today; but most industrial bureau initiatives were privately funded. First Wave government-financed loan funds and industrial recruitment programs were so rare as to be non-existent.

Ranting aside, did chambers consistently employ business attraction programs, work with government to develop incentives and extensively market/advertise their community? Yes! Using Sturges’s history of Progressive Age chambers, a more detailed and robust description of those programs is provided below.

Sturges and His First Wave

Sturges begins his description of Progressive Era chamber business attraction (called civic advertising at the time) by explaining its underlying mentality and motivation:

A mighty competition between cities is resulting from the growth and influence of commercial organizations in this country … . The board of trade … may be tremendously significant[ly] [responsible]. The board of trade has been termed the city’s garrison, ever alert to sense changing conditions or important movements by other trade centers, and faithful in building up and preserving the commercial strength of the city. (Sturges, 1915, p. 231)

He continues, asserting that:

Publicity is an important element in intercity competition … Many boards of trade send out pamphlets and illustrated booklets displaying local industrial and civic advantages. The most notable achievement in advertising of this sort is the volume New England: What It Is and What It Is to Be, circulated in 1911 by the Boston Chamber of Commerce. (p. 232; internal citation omitted)

Sturges also describes Milwaukee (1913), Year Book of the Milwaukee Merchants and Manufacturers Association, and cites Cincinnati chamber’s industrial department as having surveyed industry in the city and “furnished data regarding the cost of raw materials, freight rates, limits of natural markets, and the cost and availability of labor.” He further provides a robust set of footnotes ²² assisting readers in finding out how civic advertising is best accomplished (Sturges, 1915, pp. 231–4).

[b]ut as a general thing, industrial development involves the element of competition between cities. Going concerns remove from one place to another in order to obtain increased facilities for transportation or production, or because the new location offers better living conditions … . Most chambers of commerce maintain industrial bureaus for the purpose of discovering contemplated removals and securing a first hearing for the advantages of their respective cities. A recent government report criticized the practice of bidding for industrial concerns and offering large bonuses and other material inducements. The first duty [however] of a chamber of commerce is to the local enterprises; by making them healthy the community will be better off in times of business depression. (Sturges, 1915, pp. 234–5; internal citation omitted)

Sturges deplores the practice of bonuses (he prefers business retention), and details the New York City Merchants Association horror at the practice. But he further describes the “Williamsport Plan” for financing industries, followed most notably by the Boston chamber. The Boston chamber, he notes, organized its industrial bureau around the Williamsport Plan. That plan draws from a loan fund raised by community subscribers (a sort of business crowdfunding):

[It] guarantees on a security of a credit fund the notes of men with enterprises to establish, who have been previously recommended by the chamber … . The liability of each subscriber to the credit fund … is limited to the amount of his guarantee, and all losses are distributed pro rata. (Sturges, 1915, pp. 236–7)

Subscribers committed to $300,000 apiece and funded $50,000 immediately. The remainder was provided as needed. This is a fairly sophisticated loan/guarantee fund, and was locally and privately raised. Public funds were not involved. The pioneer was Williamsport PA (about 30,000). The plan, referenced in the Fifth Annual Proceedings of Commercial Secretaries (1915), reported a number of cities had copied it—Williamsport itself abandoned the plan in 1914.

The Fifth Annual Proceedings of Commercial Secretaries issued a survey of chambers; and, while the response can only be described as horrible, 10 percent of chambers indicated that their industrial bureaus operated “housing” (a building) suitable for industrial tenants. About 20 percent said they did have “sites” available and of those reporting yes, 140 firms had been relocated over the past three years (an average of ten per community). More communities responded in the affirmative to their provision of “free sites” to a relocating firm—meaning they would find a site and make it available to fit a visible and viable prospect. About 10 percent provided cash bonuses. Several communities, including Cumberland Maryland, were cited in descriptions of specific projects involving cash bonuses. Business retention activities were more basic, ad hoc and far less prevalent than attraction (Millener, 1915).

As to conventions, obviously a Big City program, Sturges comments:

Much competition arises between rival cities to secure the conventions of associations and societies which annually are held in the United States to the number of over 18,000 … The majority of commercial bodies [chambers/boards of trade], through their convention boards or committees, endeavor to bring conventions to their respective cities. (Sturges, 1915, p. 238; internal citation omitted) Sturges acknowledged that subsidies characterize tourism attraction program as well as industrial attraction—providing a comment from Ritchie that he recruits conventions but prefers to attract manufacturing corporations, because their multiplier is higher. Sturges suggests competition among cities for conventions is intense and that collateral material and physical “campaigning” is pervasive among chambers—although he again discourages “bonus-giving” (Sturges, 1915, pp. 238–40).

Wrap Up

Thus there can be no doubt that business attraction, incentives and marketing were typical of Progressive Age chambers/boards of trade. Attraction programs were pervasive and, while sophisticated, likely uneven in their execution. Conventions were also important in this era. Bonuses and financial/property incentives were common but controversial, even in these years. The average chamber probably was not able to offer very much, as the funds involved came not from government but from business itself. The Williamsport Plan was sophisticated, and many chambers developed loan portfolios. As a description of industrial bureau programs, conventional First Wave conceptions of their activities are a good start only.²³

DEVELOPMENT OF THE “MODERN” MUNICIPAL POLICY SYSTEM

Up to this point, economic development has been comparable to one hand clapping: private sector EDOs drive policy, and government is little more than a companion along for the ride. The problem was not capitalist greed, government incompetence or even corruption (all of which were plentiful), but a simple lack of government “capacity.” Pre-1910 American municipal government simply lacked sufficient political coherence, expertise, programmatic techniques and structures capable of sustained policy implementation. The municipal policy system was Jeffersonian/Jacksonian fragmented, dispersed authority, encased in a low-tax environment with no one in particular in charge and everybody held accountable. It was little wonder economic development policy was driven, and mostly executed, by the private EDOs and deficient HEDOs. Use of the franchise as an infrastructure EDO, while more effective than most like to admit, was really ugly to watch—and ride. In one sense the franchise got the infrastructure installed, and paid for it; but, as a service delivery structure, it was extremely inefficient and unpopular.

Gilded Age municipal government was further weakened by the hybrid policy system of ward boss-controlled municipal legislatures; by the intermittent, often uneven application of mayoral power; and by consistent interference by state legislatures. Key municipal functions—police, fire and civil service for example—were often run by state legislative-controlled boards/commissions. The urban policy system, in general, tripped through the Gilded Age in perpetual structural crisis. Gilded Age elites knew all

this—and they strive mightily to change things. The task was not an easy one; it took until the first and second decades of the twentieth century before reform efforts finally assembled a credible municipal policy system.

For government to work effectively, if not efficiently, as a partner in economic development it needed:

1. nonpolitical expertise;
2. coherence in decision-making and program implementation;
3. responsible and accountable program structures; and
4. key tools essential to governance/program implementation such as planning, budgeting, and accounting.

This basket of reforms only came together in a critical mass that produced a functional policy system when it was embedded within a workable “form of government” (strong mayor, city manager, commission) that structured authority and established a process that permitted sustained policy decision-making, implementation—and even policy evaluation. For many cities this did not occur until sometime between 1910 and 1940.

When reform started, in the 1870s, the most powerful players existing at the time were the wealthier elements of the business community. Municipal structural reform was led by Gilded Age/Progressive Era business and corporate elites and upper/middle class professionals operating out of municipal-based reform organizations. It was these fine folk who leveled the boom on state legislatures to produce the modern municipal policy system. Until that system could play ball, economic development would continue to be a privately led policy system.

Mugwumps Begin the Assault

In the nineteenth century, the reader might simply assume that most state governments were a basket of policy and moral perversions, largely dysfunctional, with inherent policy biases and distortions. The reader should also feel free to toss in remote, unaccountable, lazy and corrupt as well. Perhaps we exaggerate?²⁴ Relations between states and their creatures were far from perfect, always complicated, and frequently Dillon’s Law was invoked to accomplish all sorts of irritating, personalistic, partisan, not very necessary and time-consuming “got to get the state’s permission” type of legislation. The states left to their own devices liked to micromanage (opportunity for honest graft). These matters were worse in Western territories because, previous to statehood, they were “creatures” of the federal government, administered by territorial legislatures, Congress—or both.

Gilded Age Mugwumps were the earliest structural reformers. Mugwumps were wealthy white Anglo-Saxon Protestant businessmen, frequently of Yankee heritage, who were enemies of ethnic/immigrant political machines. In Pennsylvania, the state was the machine! Mugwumps wanted to “clean up government” (a bit of a cover for protecting their privileged position in municipal affairs), and that meant lots of things—besides putting Tweed in jail. It meant reducing corruption, fraud, governmental waste and taxes, and running city hall more efficiently (cheaply); it also meant attacking the immoral behaviors prevalent among the lower classes (drinking, brawling, prostitution and gambling). Sometimes lost in history, Mugwump reformism was as much a morality and culture war as political.

At that time, the upper business class—the 1870 one percenters—were controlling chambers. Chambers were uncomfortable with outright partisan activity, preferring such activities be carried out elsewhere. Mugwump-led civic leagues were created to handle the outright partisan initiatives which almost always meant putting the political machines (like Tweed) in their place electorally. The anti-Tweed Committee of 70 put Tweed in jail, and then morphed into the New York City Reform Club (from which Teddy Roosevelt based his early political career). Similar organizations sprouted in virtually every municipality between 1870 and 1890. They include the:

+ Citizen’s Reform Association in Philadelphia (1871) and Chicago (1874)

+ Baltimore Reform League (1885)

+ New Orleans Committee of One Hundred (1885)

+ Citizens Association of Boston (1887) + Milwaukee Municipal League (1893 + Civic Federation of Detroit (1894).

By the mid-1890s more than 80 such good government associations existed (Mohl, 1985, pp. 111–12).

Mugwumps became strong advocates of civil service reform and therefore of municipal charters that made it possible. Allegedly, the movement formally began in 1877 with the formation of the New York City Civil Service Reform Association. The driving force behind that fine group was Mugwump editor of Harper’s Weekly, George William Curtis. Between 1877 and 1881, 30 or so civil service reform associations were launched in other cities. The assassination of President Garfield by a frustrated (and insane) job-seeker prompted the 1881 formation of the National Civil Service Reform League. In short order, the 1883 federal Pendleton Act (federal civil service) followed. Several states quickly copied the federal initiative: New York (1883), Massachusetts (1884) and several municipalities—Milwaukee, Chicago, Toledo, New Orleans and Seattle during the early–mid 1890s. With the passage of civil service reform in most states by the 1890s, Mugwumps ran out of steam.

National Municipal League

With Mugwumps out of fashion, a Progressive alternative developed: the municipal league. Drawn from the municipal business and professional community, their initial reform was strengthening mayoral power to counter city legislatures controlled by ward bosses and ethnic machines. Of necessity, this required new city charters granted only by state legislatures. Rather than approach urban reform piecemeal, a comprehensive mélange of charter reforms included in one charter was labeled “home rule” as such a charter delegated broad, sometimes sweeping authority to city voters to deeply alter their government. Missouri in 1875 was the first state to adopt home rule for cities (in its case, of over 100,000); California followed in 1879 and Minnesota and Washington soon after that. By the 1890s most states had either adopted some version of home rule or were under serious pressure to do so.

The pressure for home rule charters came from the 80 or so municipal league/good government associations that had been established (1890). Municipal leagues eventually took over reform leadership, and by the late 1890s reformers had evolved into comprehensive municipal “structural reformers.” Structural reformers proved to be one of the most significant forces in our state/sub-state economic development history. Overcoming Mugwump localism, municipal leagues formed the National Municipal League (NML) in 1894,²⁵ today’s National Civic League. Within two years approximately 260 local civic and municipal leagues were functioning in the nation’s cities.

NML reformers believed that the chief problems of the city could be rectified through changes in the structural framework of municipal government. In 1889, the NML publicized its “model” or benchmark city charter that outlined the various structural improvements endorsed by their membership … . The NML called for extensive home rule from the state legislature, strong mayor, civil service, a unicameral city council, secret ballot elections, separation of municipal from state and national elections and at large elections. Urban fiscal control should be entrusted to an elected and administratively independent city controller, and street car franchises should be for limited periods of time. (Mohl, 1985, p. 116)

The NML inspired the 1902 Bureau of the Census’s initial compilation of key fiscal data for municipalities, and its commitment to “a major program of comparative statistical reporting and research designed to advance structural reform initiatives, and to make structural and administrative innovations accessible to city governments” (Mohl, 1985, p. 117). The Census Bureau instituted a uniform accounting system for cities, making corruption and fiscal waste easier to identify.

The local muscle behind the structural reform movement was provided by chambers of commerce. Their most profound changes lie in reform of elections and the rationalization of municipal bureaucracies through scientific management principles, civil service and reliance upon professional expertise in policy-making—and, of course, removal of waste and corruption and tax reduction. The impact of all these reforms, however, was maximized when the jurisdiction embraced new-fangled “forms” of government that entered into municipal policy agendas in the first two decades of the twentieth century.

Form of Government and Municipal Public Policy System

Form of government is sort of structural container which “organizes” the policy process and defines and institutionalizes authority relationships within the government policy system. Within the framework set in place by the form of government, the public policy system can wend its way through agenda-setting to evaluation. Form of government determines the “how” and the “who” (institutions and policy actors) of its public policy-making—the governmental component of the larger jurisdictional policy system. Before proceeding, a brief digression distinguishing the “public” and the larger more inclusive jurisdictional “policy” system may be helpful—even if unwanted.

Today government, the public policy system, is usually the dominant element of the jurisdictional policy system. As the reader knows by now, in the nineteenth century the public policy system was underdeveloped and a weak participant in the jurisdictional policy system. At this point in our history that is about to change. As a policy area, however, a good deal of local ED policy and programs remain beyond the control of the local municipal public policy system. State governments do their own thing, as does the federal government (SBA). All sorts of private actors, even nonprofits (universities, professional associations), operate outside the boundaries of the municipal public policy system. To better appreciate the big picture of what goes on within a municipal jurisdiction this history relies on the jurisdictional policy system. Nevertheless, since a considerable piece of the jurisdictional action after World War II involves the governmental public policy system, it will be included as well. Effort will be made to alert the reader when we refer specifically to the public policy system—otherwise default will remain with the larger jurisdictional policy system.

As previously mentioned, the pervasive form of nineteenth-century municipal government was the “weak mayor” form. The initial thrust of the NML was to legitimize the Big City trend moving toward a stronger mayor and professional “expert” management in a home rule charter reform. Eventually this new form of government was appropriately labeled “strong mayor” (it has become even more complicated as the late twentieth-century strong mayor was adapted to incorporate elements of other forms of government—the “Adapted City’ (Frederickson, 2003). As we shall discover, most of our Big Cities wound up with the strong mayor form of government—but pre-World War II many installed other forms of government described below. Conversely, second- and third-tier cities usually embraced and retained the newer forms of government such as city manager. All this gets ahead of ourselves, but alerts the reader that current forms of government are the result of an evolution that begins in this section.

It all started with the commission plan. The city commission arrived on the scene as an emergency response to Galveston’s 1901 hurricane that killed 6000 people and destroyed most of the city. At the request of the city’s business elite, the state legislature (Texas) established a five-man unicameral commission to replace the imploded mayor–council system. In the new commission form, individual commissioners headed a specific department, thus defining clear lines of responsibility. Because the commission as a collective possessed policy-making and administrative powers, public decision-making was streamlined and public policy was accountable to policymakers—and voters. The commission plan promised “businessman efficiency” with a unity of policy-making and policy implementation. The most common reforms packaged with the commission home rule request were nonpartisan elections, at large elections, the short ballot and a civil service.

Within a few years, Galveston had rebuilt, so business leaders in other Texas cities (Houston, Dallas, Fort Worth, El Paso and San Antonio) also approved commission charters. The commission accordingly acquired the moniker “the Texas Idea” (Mohl, 1985, p. 118). Des Moines may have been the first northern city to adopt the commission plan, in 1907. By 1920 the commission epidemic hit the nation hard: almost 500 cities (75 in Texas alone) adopted the commission—most of them newer, smaller, off the immigrant trail and more middle class in social structure (Rice, 2014). Over the next half-century counties also adopted the commission form—most counties today are commissions. The popularity of county commission government stems mostly from state constitutions that were approved or amended during this period. Only a few large cities adopted the commission structure: Kansas City (1910), Oakland (1911),

Denver (1913), Omaha (1912), St. Paul (1914), Jersey City (1913), Newark (1914) and Buffalo (1916) (Mohl, 1985, p. 119). Most of these cities later abandoned the commission, testifying to demonstrated policy-making inadequacies. In practice the commission form proved grossly ineffective in most cities of any size and heterogeneity. The more durable form of government proved to be the city manager. Today only 1 percent of municipal governments are commissions (2006 ICMA Survey).

City Manager Form

Staunton Virginia (1908) and Sumter South Carolina (1912—same city manager) hold first claim as the earliest municipalities to adopt the city manager form. Staunton did not adopt the associated package of election reforms, only appointing an administrative official to manage departments of the existing form of government. Sumter can better justify its claim as the first city manager form of government. Both jurisdictions were 10,000 or less in population. Dayton Ohio in 1914 was the first large city (116,000+) to change to city manager. That the city manager form was labeled at the time as the “Dayton Plan” strongly suggests that Dayton played the chief role in the herd-epidemic diffusion that followed.²⁶ An estimated 158 cities adopted the city manager form by 1920, and by 1923 there were 270 city manager-led cities (Mohl, 1985, p. 120). Cleveland, Cincinnati and Kansas City were the only Big Cities that converted to city manager. Like the commission, the city manager form appealed to smaller and mid-sized cities of America. Big Cities usually retained the mayor–council system; and several, like Buffalo—which had first switched to commission, then city manager— returned to mayor–council. Early adoptions concentrated in the Midwest, the South and California. Michigan led the nation with 23, while the Northeast lagged behind with only 18. Three of the four city manager municipalities of over 100,000 population were in Michigan or Ohio (Dayton, Grand Rapids and Akron) (Teaford, 1993, p. 122)

The city manager was adopted in Dayton after a home rule charter reform pushed by John Patterson, the CEO of National Cash Register (NCR), Dayton’s largest employer. Patterson was not a moral reformer; he did not battle corporate monopolies or seek justice for the downtrodden. In a speech made to the Dayton Board of Trade, Patterson stated that the purpose intended with the city manager form of government was to place government administration on:

a strict business basis … directed not by partisans, either Republican or Democratic, but by men who are skilled in business management and social science. A city is a great business enterprise whose stockholders are the people … people’s money [should be treated] as a trust fund, to be expended wisely and economically, without waste, and for the benefit of all citizens. (Teaford, 1993, pp. 121–2)

Patterson commenced his crusade in 1896, long before Staunton or Sumter. After a decade of fruitless effort, he had had enough of Dayton’s Gilded Age waste and fragmentation; in 1907 he threatened to move NCR out of the city—but to no avail. In 1912 Patterson accelerated his reform efforts, becoming chair of a chamber charter reform committee. That committee approved a city manager charter reform, complete with nonpartisan election and a five-member council elected at large. And then, conveniently, came the March 1913 Dayton Flood: 400 people died and $100 million of property was destroyed. The mayor, it might be added, took off for drier geographies and could not be found for several days. Patterson and NCR hit the streets and conducted rescue missions with 300 boats constructed by the company’s employees. NCR became the Red Cross and National Guard headquarters. A hospital, morgue and shelter for the homeless also were established there. It is likely the flood, as had the Galveston hurricane, made structural reform possible. When the council manager charter reform was voted in four months later, it was approved by two to one.

The city manager form centralized municipal administration around a professionally trained manager responsible/accountable to the chief elected official (mayor) and city council. The city manager directed the jurisdiction’s principal administrative functions, processes and services, and acted as the representative of the elected officials in management affairs. There was intended a formal separation of the management function from politics. The clear intention was to install the principles of scientific management and “run government like a business”—efficiently and honestly. The “thrust” of city manager election reforms reduced reliance on wards in elections. Nonpartisan/at large elections reduced special interest and neighborhoods to further a community-wide, semi-statesman perspective. The clear intent of the city manager form was to “depoliticize” administration/management/policy implementation. The short ballot, which ended the independent and partisan election of key department heads, reduced fragmentation in jurisdictional policy-making and strengthened the legislature and executive. In the Progressive Era the city manager form overcame the fragmentation and semi-chaos of the Gilded Age policy system, and minimized the impact of machines and bosses.

The city manager form of government found a home in cities of 25,000 up to 250,000.²⁷ The secret of this success was not a mystery. Sufficient size to require professional management, but a reasonably homogenous middle-class population that valued professional management and could sustain that consensus was its most fertile ground. If the city was large, heterogeneity entered into political life. The lower and working classes, it was evident, did not share the business and professional ethos underlying the council–manager form of government. So, one feature of contemporary policy systems remains the difference in policy systems between first/second-tier cities and the other tiers developed from the Progressive Era structural reform movement. Suburbs and western cities in particular are bastions of council–manager systems.

Municipal Research Bureaus

When the major corporate elites abandoned the chamber of commerce, they did not abandon their involvement in the Big Cities. Instead, the heavy hitters funded a new EDO that represented the purest form of scientific management and structural reform found in the pre-Depression years: the municipal research bureau. The thrust of the municipal research bureau was to insert the best practices of scientific management (planning, budgeting, finance, personnel management and accounting/audit) into Big City governmental administration. Scientific management asserted that “the technical side of running a government could be analyzed and developed on a factual basis in the same way as a business” (Schiesl, 1977, p. 14). The first municipal research bureau, established in 1906–07 in New York City (Dahlberg, 1966), was funded by Carnegie, Rockefeller and Mellon (McDonald, 2010). In Big City after Big City municipal one percenters stepped up to the plate to ensure their jurisdiction’s place in the Big City hierarchy—in this case competing to prove that they too could professionalize, modernize and make more efficient and honest their urban governance.

So, for example, Philadelphia set up a pilot bureau in 1908 and founded the Economy League of Greater Philadelphia in 1912. The Economy League was described as:

a local agency of a few private citizens who employ experts in what may be called municipal knowledge to examine municipal affairs, with a view to getting rid of antiquated, clumsy, slipshod or extravagant ways of doing things and substituting as far as possible, modern ones—system, precision, competency, and economy.²⁸

Chicago established an Efficiency Division within its Civil Service Commission (1910-16), and its corporate elite founded the Chicago Bureau of Public Efficiency (1910-32). Massachusetts established its Commission on Economy and Efficiency in 1912.

Bureaus pursued a robust agenda, including research/analysis of the region’s resources and challenges “with a goal of promoting sound public policy and increasing the region’s prosperity.” Research bureaus established formal linkages with universities and the larger Policy World. In 1912 the first director of the New York City Bureau of Municipal Research (Henry Bruère) published a book applying efficiency principles to municipal management. In 1913, after the election of reform mayor John Purroy Mitchell, Bruère was appointed his “chief of staff” and tasked with creating a municipal civil service system. Bruère, using the municipal research bureau as his staff, assigned the task to a promising young staff member, Robert Moses.²⁹ Moses crafted a civil service system for New York City following careful scientific management principles, with each position’s elements precisely defined and assigned a mathematical grade (Judd, 1984, pp. 99–100). Another area of municipal research bureau concern was budgetary practices. Again, the New York Bureau of Municipal Research wrote a municipal budgeting handbook and sent it to 300 municipalities. Additional research generated by the bureau’s experts was also diffused across the nation. Newly elected President Taft created the first presidential commission on municipal budgets, and appointed the president of the New York Municipal Research Bureau as its chair.

STRUCTURAL REFORMERS AND THE CITY EFFICIENT

The most impactful policy system that emerged from the Progressive Era was the “businessman” structural reformer and the City Efficient. Structural reformers, supported by chambers and the National Municipal League, dramatically restructured nineteenth-century urban governance; launched the City Efficient; “grew” the urban Policy World; and, for many cities, dominated municipal governance and ED policymaking through the 1960s. Structural reform impact was most pronounced in secondand third-tier policy systems; structural reformer impact on Big Cities, however, was uneven. The almost inevitable consequence of capacity-building (budgeting, accounting, purchasing and planning, accompanied by the employment of experts and neutral professionals) in the Big City mayor–council system was to convert a weak mayor into a stronger mayor system. Minneapolis, however, is an exception in that, to the present day, it retains a weak, low-voltage mayor-council. The Progressive structural reform policy system essentially “turns the page” by establishing the foundation of a modern, municipal government with sufficient “capacity” to be autonomous from its supportive business class—or any socio-economic class or electoral majority for that matter.

The structural reform policy system reflected the values, organizational management practices and techniques of business. Its chief private supporter was the chamber, municipal research bureaus. Real estate exchanges—loosely linked to chambers but focused upon CBD, neighborhood and subdivision development—were serious policy actors in real estate matters. Structural reform municipal policy systems usually, but not always, coexisted with machines and social reformers if need be. A new-style mayor-dominated semi-ward, semi-municipal bureaucracy machine emerged as well in Big Cities, and would have been the “default” policy system of most municipalities, especially non-Big Cities, until the Great Society Era. In short, structural reformed municipal systems continued to exhibit substantial variability, although most cities talked and walked to the tune of the City Efficient.

It’s called many names—the City Practical, the City Functional or the City Efficient—but the core of each was that municipalities should operate from sound business, scientific management or efficiency principles. Typically, that translated into increased government capacity, budgeting, planning, audit, a tendency toward at large rather than ward districts and the electoral reforms associated with the city manager form of government. In Big Cities that meant a much greater role for the mayor as he/she presided over a considerably more formidable bureaucratic apparatus. The unicameral legislature still retained a serious role in policy approval, however. As years went by, the mayor was drawn increasingly from the “political” class and less frequently the “businessman.” The incrementally increasing role of the federal government (and state) and the already felt need for additional municipal fiscal resources made political skills more useful. ED, still searching for an identity, was dispersed throughout several conglomerate departments, especially planning and public works. The chambers remained the lead agency for jurisdictional ED, and port authorities exploded in importance—taking over much of the non-automobile transportation infrastructure. This story will be more fully described in future chapters.

Planning was in its heyday; how could an urban area be efficient without a plan? Zoning and building codes became institutionalized, and movement was toward something called a “comprehensive plan”—a plan that planned for virtually everything in the urban area and logically prompted initiatives calling for some form of regional planning. The general policy thrust was low-tax, low-cost, public referendums for bond-issuance and for “efficient” modernization of urban infrastructure—making sense of the tangle of hanging wires that delivered electricity and telephones, pipes for energy and water/sewerage to reduce flooding and accommodate new paved streets. More than anything, as time went on, the City Efficient had to cope with the automobile— consolidating streetcar (now bus) franchises into municipal or port/authority-like agencies.

SELLING FROZEN WATER: ED COPES WITH DILLON’S LAW

Lest the reader think that Dillon’s Law was thrown out with all this home rule, we conclude the chapter with a policy reminder of its persistence throughout the period. Think of your life without a refrigerator. How do you keep stuff cold? Ice. Ice cut from frozen bodies of water and stored below ground in very cold caves or ice houses. Affordable ice was a public necessity, and that is what encouraged municipalities of all stripes and persuasions to enter into and compete with private firms in the ice market. Enter “the saga of municipal ice.” In most cases when municipalities entered into the ice industry, no legal challenge followed. That was not the case when the newly elected socialist mayor of Schenectady New York started that city’s ice business (1911), fulfilling his election pledge to “save the babies of the working class.”

The city attorney reasoned that existing legislation empowered the city to store and transport water (water lines and so forth) and ice was, after all, only frozen water. So hiring workers striking from General Electric, he started cutting and storing ice. In the summer he gave it away free to needy families—that was before a state court, on July 4, decided it was not legal. That night the city set up a nonprofit and continued its ice business. Private ice companies struck back and harassed their new competitor. The nonprofit acquired operating funds by selling “ice at cost” buttons and finished the summer. Next winter the river didn’t freeze. But the damage was done—in the future, when asked, state courts throughout the nation blocked municipalities from the ice business. Dillon’s Law had survived home rule and the municipal league movement— now it included state judicial review in addition to approvals from the state legislature.

In 1915 Harvard University’s Municipal Research Bureau reported that many municipalities had entered the ice business and that it resulted in lower-cost ice to the consumer. By 1919 Cleveland owned and managed a cold storage plant, and many municipalities in the Privatist but hot and humid South did so as well. In 1919, however, one state supreme court, Missouri, in Kansas City v. Orear, overturned an approved municipal bond referendum to build and construct a municipal ice plant. It was not, the court held, a legitimate public purpose, “and not even the sovereign Legislature, much less a municipal corporation, can, by fiat, make that public which is in fact private.” The year after, the state of Missouri approved a constitutional referendum/amendment permitting municipalities to engage in the ice business. Ten years later (1929) the owners of the Denton Texas Home Ice Company thought they could stop Denton Texas from starting its own municipal ice business; that state court, however, said the city could do it—and the Texas Supreme Court upheld the lower court decision allowing the municipality to proceed with its ice business (Radford, 2013, pp. 78–82). Dillon’s Law and state judicial review had become the de facto process by which nearly every major economic development innovation or change went through—and goes through to the present day.

The bias was that courts followed a strict construction, and enforced older interpretations and statutes (including gift clauses) of state constitutions—continuing the traditions and values of the first settlers and preserving the values of the founding fathers. On a state by state basis the court would review whether or not the action was constitutional, making determinations that shaped the content and the process of economic development innovations. Over time, the court might reverse early decisions, but usually did so preserving as much of the judicial precedent as possible. So a litany of future ED tools and programs—tax-exempt bond issuance, tax increment financing, eminent domain, urban renewal, municipal ability to lend to private firms, to own property to benefit private firms (industrial parks); economic development zones, annexation and so forth—went through this maze and obstacle course. In this manner, the 50-state SSS, described in our opening chapter, came into being. The state court system had become a player in urban economic development. The reader, no doubt, might sense that Mistoffelees and political culture have entered the premises.

NOTES

1. Don’t know what a “tag” is? Either did I. It is the label on your clothes (brand name, care instructions and whatever else went on a nineteenth-century tag). Tags apparently don’t come naturally on clothes, but must be attached. That is what Denny Tag machinery did.
2. Borough councils granted tax abatement to any firm employing ten or more. West Chester, 7000 in 1880, reached 8000 by 1890.
3. Its headquarters remained in West Chester until 1986 when the plant was sold shortly after the company was finally unionized. Denny Tag closed forever in 1991, leaving 400 workers unemployed—a victim of 1980s’ deindustrialization.
4. Thanks Mom and Gramps—economic development owes you the Denny Tag case study.
5. Marseilles France claims to be first (in 1599), followed by Bruges Belgium in 1664.
6. Boards of trade originated in colonial times, imported from the United Kingdom. New England boards of trade were a hotbed of revolution. Ask Sam Adams, a Boston Board of Trade member; he’ll tell you about a tea party planned at a board meeting.
7. Proceedings of the Second Annual Meeting, National Board of Trade, 1870.
8. “Milwaukee in Miniature,” Milwaukee Historical Society, http://www.milwaukeehistory.net.
9. Much of this section borrows from Mead (2014, pp. 146–8).
10. Supplement of June 30, 1885, no. 162 and 20, 1985 PA Laws 193 (amending 1879 PA Laws 112, Commonwealth v. Northern Electric Light & Power Co, 145 PA 105, 22 A.839.
11. The North Pole architecture of the Chris Van Allsburg–Tom Hanks 2004 Christmas movie Polar Express is based on Pullman worker-housing design. The neighborhood has since achieved Landmark designation, houses about 7000 residents and is listed as one of Illinois’s seven wonders. Pullman’s conversion from a horrible paternalistic corporate suburb to a wonderful, historic, gentrifying urban neighborhood is quite remarkable—and bewildering.
12. Examples of subsequent garden cities include: Kohler Wisconsin; industrial villages in Camden, New Jersey; Worcester Massachusetts, Erwin Tennessee and Wilmington Delaware; also John Nolen’s garden suburb of Mariemont Ohio (outside Cincinnati) and several in Bridgeport Connecticut. Other examples are Venice Florida, Shaker Heights in Cleveland, the County Club District in Kansas City and the well-known Palos Verdes Estates south of Los Angeles. In the late 1920s planners Clarence Stein and Henry Wright used garden city concepts to build Sunnyside Gardens in Queens and Radburn in suburban New Jersey. See Rybczynski (2010, pp. 37–9).
13. Mead’s description of the “average secretary,” based on a 1919 survey of 177 chamber secretaries, suggests a wide differential in staff size from the Big City chambers to the smaller city/town; but, as a whole, the profession was reasonably well paid for its day. Staff attention was intensely focused on increasing chamber membership, indicating the need for revenues (Mead, 2014, pp. 196–9).
14. Mead quotes Ritchie: “In the East as in the West, we have the Boosters Club, the Boosters League, the Chamber of Hustlers, and a variety of associations with equally appropriate nicknames; and they are all supposed to be conducted by staid intelligent business men” (Mead, 2014, p. 170).
15. Association of Chamber of Commerce Executives (ACCE), http://www.acce.org/centennial/centenial-leaders/.
16. In 1909, within 100-mile radius of Dallas, there were 61 paid chamber leaders. It’s perhaps not surprising that Texas hosted what may have been the first “institute program” for training chamber executives (Mead, 2014, p. 190).
17. The name changed in 1948 to the American Chamber of Commerce Executives, and in 2014 to the Association of Chamber of Commerce Executives.

1. For example, Charles Dwight Willard, A History of the Chamber of Commerce of Los Angeles (1900); Joseph Bucklin Bishop, A Chronicle of One Hundred and Fifty Years: The Chamber of Commerce of the State of New York, 1768–1918 (1918).
2. President Taft used these words at a US Chamber address (Mead, 2014, p. 198).
3. The Clearing Industrial District, noted for its 40-acre “superblock” that permitted direct access from a rail siding and a number of configurations which increased efficiency of use and reduced costs for occupants.
4. Eisinger (1988, p. 178) cited Ramon Flores y Garcia, The Industrial Park as an Industrial Incentive, Engineering thesis, Stanford University, 1969.
5. Special Agents Series—No. 60. Commercial Organizations, by E.A. Brand, Washington D.C. (1912); Special Agents Series—No. 79. Commercial Organizations in Southern and Western Cities, by George W. Doonan, Washington D.C. (1914); Frank L. McVey, The Making of A Town (Chapter X); S.H. Clay, City-Building; H.F. Miller, “Publicity,” Proceedings Fifth Annual Convention of Commercial Secretaries; and something described as “Putnam’s 1910, Vol. VII, pp. 673–80, “Era of Civic Advertising.”
6. To capture the spirit of what Sturges enumerates, readers might read Lewis Atherton, “The City Comes to Main Street,” in his Main Street on the Middle Border (Bloomington: Indiana University Press, 1954) and Kenneth T. Jackson and Stanley K. Schultz, Cities in American History (New York: Knopf, 1972).
7. Jon C. Teaford should be consulted for a balanced perspective. For a more cynical treatment stream Blazing Saddles or The Best Little Whorehouse in Texas will do fine.
8. In attendance were Theodore Roosevelt, Louis Brandeis, Frederick Law Olmsted and Mary Mumford.
9. Richard S. Childs, the father of city manager system, played an aggressive role to promote the city manager form. He linked the city manager form with nonpartisan and at large elections and the short ballot reform. The ICMA was founded in 1914.
10. Banfield and Wilson reported that, by 1960, 50 percent of cities in that population range had council-manager systems. Cities greater than 500,000 (four cities) were 19 percent council-manager (Banfield and Wilson, 1967, p. 169, Table 10).
11. Philadelphia Evening Bulletin (1912), “Philadelphia Economy League,” http://www.economyleague.org.
12. Moses, by the way, was a recent graduate of the NYC Municipal Research Bureau’s Training Institute.