Pre-Depression South
Our history has thus far dwelled on hegemonic northern/midwestern Big Cities. “Away down South in the land of Dixie,” however, is another world entirely. The contrast is almost breathtaking. Southern realities are the best starting point to understand variation within American economic development. The South’s ED is not warmed-over Big City ED. Southern ED should be understood on its own terms, in that it confronted its own regional realities. Moving south of the Mason–Dixon Line, our history changes tone and content, goals and strategies.
When last we left the South in Chapter 2, our discussion ended with southern settlement and the resulting cotton plantation-based export economy. The southern policy system was characterized as feudal (Nicholls, 1960, p. 44ff), resting on slave-dominated, low-wage, white subsistence agriculture. The agricultural export nexus went through southern port cities—but ships leaving southern ports often headed north to New England textile mills (Doyle, 1990, p. 4). We left the South as a developing nation with a feudal-like policy system, shipping raw materials to an industrial world.
Then the South lost the Civil War.
WHERE, OH WHERE IS THE SOUTH’S INDUSTRIAL CITY? THE SOUTHERN CONTEXT
The North was home base for the American version of the industrial city. Northern growth, fueled by Yankee innovation and a cutting-edge interstate transportation system, produced manufacturing-dominant jurisdictional economic bases. The arrival of foreign-born immigrants translated into a cheap workforce and a host of intense urban problems and trends. Northern ED strategies/tools were conducted within a growth environment, expanding urban areas and pushing into hinterland peripheries and new markets for firms in the jurisdiction’s economic base. The North’s relevant competitive hierarchy was mostly northern; the North competed with itself—not with the South or West.
These conditions are absent in the post-Civil War South. This section summarizes critical features that distinguish southern from northern ED. These features combined constitute “the southern context” within which “southern-fried economic development” developed, operated and evolved. Southern ED marched to the tune of “Dixie,” not “The Battle Hymn of the Republic.” Pre-1930s’ contextual differences between North and South include:
+ the lack of sizeable urban areas and minimum industrialization;
+ an almost complete absence of foreign-born immigration;
+ a southern economic and political system manipulated by conquering northern states and their well-developed industrial economies—a northern hegemony many believed rendered the South little more than a colony of the North.
Urbanization and Industrialization
In comparison to the North there were few southern Big Cities. In 1860 New Orleans (population 169,000) was the nation’s sixth largest urban area; next largest was Louisville (68,000); 22nd ranked Charleston (41,000); 25th ranked Richmond (38,000); Memphis 38th (23,000) and Mobile (29,000) were the South’s largest cities. Thirteen Confederate cities were in the 1860 top 100 (such as Atlanta, 9500). In South Carolina, Charleston and the state capital, Columbia, had populations slightly exceeding 2500. The nineteenth-century industrial revolution had mostly bypassed the South. In 1850 Louisiana and Mississippi, the heart of the Cotton Belt, had only three cities that exceeded 2500 population.
Plantation agriculture, and the cotton crop … required only minimal urban development … Southern urban development was mostly limited to seaports and a few river ports … ports were usually linked to river systems … [that] penetrated the agricultural hinterland and bound the plantations to the coastal cities. (Doyle, 1990, p. 3)
Big City economic development was not relevant to the post-Civil War South. Post-Civil War (1870) top 100 urban areas, however, included only ten cities from the Confederacy—four less than 1860. New Orleans had fallen to 9th (191,000), Richmond climbed to 24th (51,000), Charleston was 26th (49,000), Mobile 27th (32,000) and Atlanta, despite William T. Sherman, was 61st (21,000). To put this into perspective, New York/Brooklyn had a population of 1.2 million, Philadelphia 675,000, Boston 250,000; and Cleveland, Pittsburgh, Detroit and Milwaukee just under 100,000. The war drove population into some southern cities, but northern growth pushed others off the list. An observable trend was that the older port cities (Charleston, Savannah, Mobile and New Orleans) were doing markedly less well than new up and comers like Atlanta, Memphis and Birmingham—and Texas.
Fast forward to 1900 and, aside from New Orleans (which again dropped to 12th), Memphis Tennessee (37th) was the only Confederate city above 100,000 (at 102,000). Atlanta was 43rd (8000), Richmond 46th (85,000), Nashville 47th (81,000), Charleston 68th (56000), Savannah 69th (54,000) and San Antonio 71st (53,000). Overall there were 13 Confederate cities in the top 100, seven of which had less than 50,000 residents (four with less than 40,000). There was not a single city in North Carolina with a population attaining 25,000, and only six greater than 10,000. New York, on the other hand, had 3.4 million, Chicago 1.7 million and Philadelphia 1.3 million. The Gilded Age witnessed the rise of the Snowbelt—an age of immigration and industrial cities that drove economic growth.
So, in 1900, we can ask: “Where oh where are the South’s industrial cities?” Atlanta … a regional symbol of growth and prosperity … was little more than a large country town in 1900. Its area, despite annexations, was four times less than Boston and thirty times less than New York, It was still a walking city. (Goldfield, 1982, p. 103) The South Central states’ urban population reached 11 percent in 1900, and the South Atlantic states (omitting Maryland, DC and Delaware) region was only 9 percent urbanized. In comparison, the North Central states were 31 percent and the North Atlantic states 59 percent urban. For all the vaunted poverty of the Big City immigrant, however, nothing compared with poverty found in the South. In 1880 the per capita wealth of New England and Middle Atlantic states was $1353, compared to the South’s $376 (US Census; Woodward, 1981, p. 111).
Absent immigration, manufacturing and the big industrial cities, the landscape of the South bore little or no resemblance to the North and Midwest. The Parks Movement, the rise of planning and Progressive social reform mayors/movements are muted to absent in the Deep South. Not having immigrant slums, smaller southern cities had little motivation to imitate their northern neighbors.
The late 1890s through the World War I, however, was a period of southern urbanization and industrial growth. There was little, if any, lag in diffusion of technological innovations (“from electricity to architectural innovations”) and:
[The] lexicon of “urban problems”—housing, transportation, sanitation, congestion, police protection, and a full panoply of needs requiring expanded city services—was universally applicable to all cities regardless of their size, or regional location … . As southern cities grew, their class structures began to assume the familiar cast of those of northeastern and Midwestern municipalities, and patterns of land use and population distribution were basically the same in cities throughout the country. (Brownell, 1975, p. 9)
Southern cities did not expand dramatically post-Civil War, but they were not technological backwaters. Rural areas, where most of the population lived, were another matter.
Southern CBDs fared well—especially during World War I. Skyscrapers were built in middling-sized cities, more for local pride than economic opportunity: “Hating and Imitating, Muddled for sure”—an attempt to “out-Yankee the Yankee” (novelist Sherwood Anderson; Goldfield, 1982, p. 130). Southern CBDs developed robustly after 1900:
The erection of business blocks and the differentiation of commercial activities reflected the emergence of downtown retail centers … The establishment of department stores with local capital, such as Rich’s in Atlanta and Neiman Marcus in (1907) in Dallas—testified to an increasing urban vibrancy in the South’s larger cities. (Goldfield, 1982, p. 129)
Southern Progressive community development languished in the absence of immigrant neighborhoods. The southern City Beautiful, if not stillborn, served Redeemer elites and expressed itself as an initial planning exercise that ultimately produced a City Functional response. It wasn’t for lack of trying—John Nolen between 1906 and 1925 developed plans for 13 southern cities (Silver, 1984, p. 25).1 Still, a smaller-scale CBD evolved in the South much as in the North. The physical landscape of the smaller, less industrial, non-immigrant urban South (muted) was similar to the North.
The South and Immigration
Let’s get to the point. Immigration was a northern phenomenon (Fleming, 1905).
The flood tide of European immigration, in 1899–1910, swept past the South leaving it almost untouched and further isolating it in its peculiarities from the rest of the country. New Hampshire received more European immigrants in that decade than the total received by North Carolina, South Carolina, Tennessee, Mississippi, Georgia and Kentucky. Connecticut got many more than the whole South combined … moreover, all the Southern states, save Oklahoma, Florida and Virginia, lost more than they gained [through foreign immigrants]. (Goldfield, 1982, p. 130)
As far as population goes, the South, despite the fertility of its residents, witnessed an on/off regional exodus of both white and black. Embedded (chained) as both were to subsistence agriculture, the South lacked surplus labor for manufacturing expansion. Initially it was hoped foreign immigrants could counter the post-war exodus. As early as 1876 the New Orleans Chamber organized a convention to attract immigration into southern states. Co-organizer of the conference, the newly formed International Chamber of Commerce and Mississippi Valley Society, “wanted to bring the world to the lower Mississippi region. Its president was none other than Jefferson Davis himself” (Mead, 2014, p. 109). The initiative failed.
Around 1900 a serious southern economic development immigrant attraction strategy developed momentum.2 Southern leaders founded (1898) the Southern Development Association, dedicated to “promot[ing] the colonization and the improvement of the South” (Woodward, 1981, p. 291).3 Railroads joined in, and southern state governments also participated:
state bureaus, land companies, and numerous immigration societies of businessmen took part in the movement. Each state had an immigration bureau of some sort by 1900, and most of them had agents in New York and the West, and some in Europe to spread propaganda. Their effectiveness was limited, however, by small appropriations. (Woodward, 1981, pp. 297–8)
People recruitment, however, also failed miserably. The lack of foreign immigration and the exodus of resident populations left their effects on the course of southern economic development: “The largely internal regional migration to [southern] cities produced a more homogenous ethnic pattern than that which existed in the North, and the small town [remained] more significant within the southern urban configuration.” Further, “the comparatively greater number of rural people and the greater reliance on an agricultural and commercial economy, and the large concentrations of blacks with their distinctive subculture—all had an impact on southern cities” (Brownell, 1975, pp. 9–10). The South would develop its own characteristic policy systems—systems that would set different priorities and goals from the North.
Post-Civil War Jurisdictional Landscape: The Cotton Town
The cotton town was the jurisdictional workhorse of the South’s agricultural economy. Cotton was grown in the “Cotton Belt,” a loosely defined collection of 600 counties scattered through the South, but concentrated in Alabama, Tennessee, Arkansas, Mississippi and Georgia. East Texas, southern Louisiana (Mississippi delta region) and northern Florida were the most dependent. Cotton towns dotted the landscape through the 1920s and were the South’s most common jurisdictional policy system. Cotton required urban centers for bale compressing, cottonseed/oil processing, cotton gin maintenance, logistical/finance/shipment/storage—and consumer purchasing and government. Cotton towns ranged between 5000 and 10,000 residents, rarely growing beyond that. Since cotton was shipped to regional centers (Dallas, Memphis, Atlanta, New Orleans) or sent by rail to northern cities, there was little opportunity for innovation or entrepreneurial activity.
Depressed sharecropper/subsistence farms kept discretionary income low in cotton towns. Whatever excess population was generated made its way to larger cities. Otherwise, people simply left the South for “warmer and colder” suns. Mark Twain described these 1880s towns as being composed of:
a fine, big mill for the manufacture of cotton seed oil … There were several rows and clusters of shabby farmhouses and a supply of mud sufficient against a famine in that article for a hundred years … There were stagnant ponds in the streets … Still, it is a thriving place. (Goldfield, 1982, p. 88)
Thriving place in 1880 the South might have been, but by 1930s Depression it decidedly was not. From such a cotton town (Columbia Mississippi), the South’s most controversial economic development innovation, the BAWI industrial development bond, would emerge.
The cotton town was the South’s jurisdictional backbone—cultural home to agricultural, low-tax/service/regulation voters who dominated state legislatures, setting the course for the South’s business climate and state-level ED. The South’s urban hierarchy and style of state/sub-state politics were characterized by second- and third-tier municipal, intrastate competition that played out within the Democratic Party’s state legislative delegations. The South’s jurisdictional configuration meant that, in large swathes of the South, municipal corporations were fewer, smaller and weaker than their northern and midwestern counterparts. Tons of small rural towns/cities dominated the South’s jurisdictional landscape, surrounded by expanses of unincorporated areas. Counties assumed an important role in southern ED, but often lacked powers. State governments were drawn into ED because of this jurisdictional landscape. Nineteenth century southern state legislatures, more unconsciously than planned, set in place the now-famous southern business climate.
[Southern] Business progressives concentrated on the economic problems of the South— building roads to enhance the region’s transportation networks, maintaining the South’s wage advantages in industry, luring capital for the textile mills … Low taxes remained a central feature of their program so … despite the 1920’s Southern state debt and revenues were rising at a faster … than in the rest of the nation … per capita tax collections remained well-below national norms. The South’s business progressives erected a minimal infrastructure for industrial growth, without threatening the Redeemers commitment to low wages, unregulated business and low taxes. (Schulman, 1994, pp. 10–11)
With the turn of the century, commission (Galveston) and city manager (Sumter SC) forms of government first developed in the South. Spreading across Texas (called the “Texas Plan” so widespread was its adoption there), the commission was copied throughout the South. The city manager was adopted nationally following its adoption by Dayton in 1914. The motivation behind adoption of commission/city manager government was often frustration with the Jeffersonian–Jacksonian fragmented policy system. In the South those governments were unduly dominated by unresponsive city hall/county courthouse cabals, unwilling and incapable of installing the new-fangled infrastructure (paved roads, water/sewerage, telephones, electricity and the like). City manager government thus became a vehicle for southern modernization. Southern municipal policy capacity was accordingly enhanced in the first decades of the twentieth century.
The South as a Colony
- Vann Woodward (1981, pp. 291–320) asserted that North/Midwest/Wall Street exercised control of the South from the “commanding heights” of its industrial economy. He outlined how this hegemony opportunistically garnered control of southern railroads, steel and coal industries, and much of the South’s basic extractive industries (timber, sulfur, fertilizer, manganese, bauxite). Southern finance and lending, dominated by New York City money-centered banks, was largely restricted to agricultural-related lending— diverting investment away from new industries. Only the furniture, tobacco and textile industries were southern financed. Statistics mostly support Woodward’s contentions— whether they account for southern underdevelopment is a more complicated and open question.
The metropolitan North retained … the more profitable functions of transporting, processing, and distributing of goods. The large extent to which ownership of the South’s transportation, communication, financing, and manufacturing corporations was centralized in the cities of the Northeast, as well as the considerable degree to which ownership of the region’s natural resources … Cut off from the better-paying jobs and the higher opportunities, the great majority of Southerners were confined to the worn grooves of a tributary economy. (Woodward, 1981, pp. 317–18)
How one interprets Woodward’s “colonial metaphor” affects our judgment concerning the goals behind southern state/municipal ED policy-making. Woodward argues that a “new business class” contested colonization and insisted the South install key infrastructure so that industrialization could proceed, thereby challenging, or at least mitigating, northern control over the South’s economy. Woodward’s critics counter that the southern planter class maintained its sustained dominance over most southern state and local policy systems, and opposed “commercial and industrial interests by using the power of the state to thwart … [such interests] by deliberately arresting technological innovation and economic development that would undermine the plantation system” (Doyle, 1990, pp. xii–xiii). These critics contest Woodward’s so-called “divided mind” of the post-Civil War “New South.” That divided mind, however, is central to our “southern-fried ED approach” that will be presented in the next section.
Historian Eugene Genovese (1967) asserted that planters in the South deliberately stymied—or when necessary, sponsored and controlled—urban and industrial developments in the region. They feared that cities and factories would provide foundations for social classes hostile to their regime and a threat to its hegemony. While not wishing to insert ourselves into this debate, it cannot be avoided. Our research (and the position, arguably, of most contemporary historians) is that both were right—and that Woodward was fundamentally correct in asserting the South’s divided, indeed conflicted, policy systems. Time periods matter. Indisputably, a new South business elite did arise in many (maybe most) southern cities, especially after 1900. There is also little doubt that the default in most state legislatures was toward planter dominance in policy-making; and that planters were not accepting of industrialization, but were willing to accept, indeed foster and support, transportation infrastructure from which they benefited. It is also indisputable, and we provide evidence to that effect, the South did industrialize and urbanize: Birmingham’s steel mills, for instance, exist, and substantial rail infrastructure was installed.
This history agrees with Doyle/Goldfield that planters supported economic development from which they benefited—that planters were “heavily involved in the South’s industrial and railroad ventures, often in partnership with urban industrialists and city boosters. Southern economic development was necessary in order to assure genuine independence from the North. There was … a basis for class alliance” (Doyle, 1990, p. 7; Goldfield, 1982, Chaps 1 and 2). Moreover:
[An] urban business class played a prominent role in shaping … the modern South … though uneven and varied its impact was in different types of cities … A business class took form in the cities of the New South … created a set of formal [EDOs] … fostered a social affinity among themselves and … form[ed] a common view of the goals they wanted to pursue for their cities, their region, and themselves. (Doyle, 1990, pp. xiii–xiv)
The reality of being both a defeated and a developing nation, the divided mind of southern state/municipal policy systems and the contest between agriculture and industrialization (focused heavily on infrastructure) created a distinctive set of policy systems through the South—clearly supporting our contention that the South, and southern economic development, proceeded along a different path than our Big City North.
SOUTHERN-FRIED ECONOMIC DEVELOPMENT
Economic development policy and strategies were formulated and implemented within this “southern context.” The outputs that resulted, not surprisingly, were uneven and often at cross-purposes. Planters wanted to preserve as much of the “Old South” as they could—and they did this through Jim Crow laws and a “Solid (one-party) South” that forged a reasonably closed set of sub-state policy systems. Post-Civil War economic growth/industrialization was trapped in a Sargasso Sea of a planter-dominated state and local policy systems. A meaningful shift to New South reformers did not happen until after 1900. That the southern economy industrialized through investment of northern/ foreign investment generated mixed feelings about the direction of change, and frustration as to how southern governance could “manage” that investment. What all this would end up producing was, by 1930, the poorest region in the nation. And then the Depression hit! Despite its urbanization, vastly improved transportation infrastructure and encouraging growth in industrial production, the South could not break free from its core agricultural-export economic base, with a semi-enslaved, low-wage, low-skilled workforce removed from the political process. It would take the Great Migration/Civil Rights Movement many decades to remove those burdens.
Unlike the North, with a mix of Progressive-leaning political cultures and an economics and politics of growth, the South countered with Privatist solutions that overall produced growth that could not achieve sufficient momentum to break the chains of the agricultural-export/low-wage/skill workforce nexus. Whatever growth it generated was tainted, largely controlled by external forces—and much of its profits went north. But, as we shall see, where that semi-feudal nexus was weakest, change was possible. Northern investment created new cities like Atlanta and Miami, and even Birmingham, which would become the foundations of a future New South. It was, however, on the region’s peripheries that the nexus was weakest: the new cities that developed in Texas were not Old South in culture or economics, but Privatist to their core. Their explosive growth, based on the serendipitous discovery of a transformative energy agglomeration, was a marked departure from the cities and the ED generated by our “southern-fried ED” that characterized most policy systems in the Old South.
Reconstruction
Whatever scars and changes the short-lived Reconstruction inflicted on the South, what is surprising is how much of the pre-Civil War South continued into the post-Civil War South. Gone with the Wind’s opening narrative—“Look for it only in books, for it is no more than a dream remembered, a civilization gone with the wind”—was vastly overstated. Politics, structures and cultures don’t turn on a dime. The North, having won the war, moved on; the South, having lost it, didn’t. Southerners often perceived themselves as a conquered nation and a colony of the North. There was sufficient reality to both to justify defensiveness and a determination to preserve their way of life. It didn’t help that the North was not especially forgiving. So the Civil War left an overlay on southern policy evolution that statistics cannot convey—a factor critical to an understanding of southern economic development.
At its max, Reconstruction lasted only a decade, and for most states less than that. In 1876, the year Reconstruction ended, only three states (of 13) had not already regained constitutional sovereignty and state/local political autonomy.4 Whatever else its deficiencies, Reconstruction was not as transformative as often thought 5—it was too short to change patterns developed over hundreds of years. The Southern planter, like Scarlett O’Hara, rebuilt the plantation system. Sharecroppers replaced slaves, cotton was still king, the rural agricultural-export economy came back to life—and the planter Redeemer returned to politics and municipal policy-making. Still, Reconstruction did leave a couple of legacies that affected post-Civil War economic development.
Physical destruction of southern railroads, cities and plantations was considerable. Incredible war casualties and the loss of two generations impacted the post-Civil War southern labor force in ways lost to us in the twenty-first century. Infrastructure and cities, never the South’s strong point, were ripped up and burned down. While several cities (Richmond, for example) did increase in population (black/white refugees), the South needed rebuilding. Reconstruction policy systems, carpetbaggers and former slaves/black voters created a hated but distinctive set of policy systems throughout the South. Traditional Jeffersonian planter antipathy to taxes and active government was replaced by Reconstruction-era policy systems that tackled urban/industry rebuilding— with decidedly mixed motives that included greed and corruption as well as economic development. Reconstruction policy systems did not share planter reluctance to industrialize; on the contrary, they assumed it to be a first order priority. As in the North, the issue was how—and who—should install critical transportation infrastructure necessary for an industrial economy. Resulting aggressive ED, tinged with corruption and colonization, compels us to revisit discussions concerning hybrid EDOs and the infamous constitutional gift and loan clauses.
Second Phase Gift and Loans
As argued in Chapter 3, the 1840s’ gift and loan clauses involved canals and railroads in the North, and the chartering of state banks and farm and plantation lending rather than transportation charters.6 Railroad corporate charters continued through the war. Reconstruction policy systems enacted new constitutions that included public support for railroads (Summers, 1998).
Every Reconstruction constitution permitted direct subsidies to railroads and other private entities; most authorized the loan of state credits for corporate stockholders … [while permitting general aid to railroads, some like] Arkansas banned special acts of aid and incorporation … Alabama required two-thirds vote … and North Carolina required that new debts be covered by taxes or state bonds. (Tarr, 1998, p. 113)
A burst of railroad infrastructure development financed with state credit lending and loans followed. This proved unfortunate in that: (1) the Panic of 1873 prompted bankruptcies; and (2) Reconstruction’s demise brought Redeemer majorities to state legislatures, and a “shift in constitutional direction in the South. If the economic keynote of Reconstruction constitutions was economic revival, the aim of post-Reconstruction constitutions was … ‘to govern as little as possible’” (Tarr, 1998, p. 113). New constitutions “curtailed state promotional efforts,” “forbade use of public credit for the benefit of individual or corporation” (Florida), and “made loans of credit conditional on referendum support by two-thirds of all voters (South Carolina). The 1875 Alabama constitution “eliminated the post of commissioner of industrial resources, and imposed an absolute ban on state, county, and local aid to corporations for internal improvements.” Louisiana and Georgia repudiated railroad bonds: “Those who championed these constitutional changes assumed either that frugal government would attract investment to their states or that agriculture, rather than industry, was basic to their state’s economic revival” (Tarr, 1998, p. 114). Post-Reconstruction state constitutions seemingly moved counter to contemporary conceptions of southern state economic development/business climate promotion and corporate subsidies. Instead they supported Genovese’s position against Woodward. What gives?
During the 1850s railroads and manufacturing firms increasingly adopted modern forms of corporation (Chandler Jr., 1977); and, in that environment, states across the nation enacted tax abatement laws favoring manufacturing to compensate, thus maintaining their favorable manufacturing business climate. Many states in the South did so also. Post-Reconstruction southern state pushback from Reconstruction-era policy systems’ uncommonly close partnerships with railroads/business—accompanied by manufacturing tax differential legislation—therefore, were not as radical as would appear. The Redeemer low-tax/low services nexus and low-wage subsistence workforce set the southern business climate apart from the North, not its tax abatement climate—especially considering that several more southern states applied business taxes (personal/property income) than in the North.
What did happen nationally in the 1870s was not that state and local financial relationships with railroads, port facilities (transportation infrastructure) and private corporations were reduced, but that structural forms and ED tools shifted. During this era, state legislatures increasingly empowered private firms (in the transportation and extractive industries especially) to exercise eminent domain. This translated into use of the modern private corporation as a hybrid EDO. The Big City streetcar franchise demonstrates how a modern private corporation was provided public powers and financing, but “regulated” to accommodate public purposes in key transportation/harbor infrastructure. Interstate and continental railroads were another example. Because government financial/public power relationships with private corporations continued through the nineteenth century, however, structural refinements and new ED tools were required.
The US Supreme Court Citizens’ Saving and Loan Association v. Topeka decision led to significant innovation (and change) in a key economic development tool: government bond issuance for infrastructure and private corporations.7 That decision started American state courts down a long road toward defining “public purposes” for which government debt and appropriation could be linked to private corporations and private activities. This little-known decision repudiated a Topeka municipal bond issuance for an ironworks company by ruling that public funds could only be spent for a “public purpose.” Acknowledging that jobs and revenues created by the ironworks did favorably impact the municipality, the Court said that was counterbalanced by the reality “that no line can be drawn in favor of the manufacturer that would not open the coffers of the public treasury to the importunities of two-thirds of the businessmen of the city or town.” Further, the Court held that public funds could only be used “for purposes which taxes can be levied.” If legislatures lacked authority to raise taxes for a purpose, then bonds could not be issued for that purpose. State courts across the land applied this principle in the following decades.
The Topeka ruling set up a firewall of sorts between government financial assistance and private corporations. But by making a link of public funds to taxing authority, an opening was created that had an enormous impact on economic development financing: “The nexus between borrowing [public] money and taxation is the payment of interest” (Gold, 1987); interest payments are ultimately paid by taxing. If, however, interest payments would not be paid by taxes, then public indebtedness could be possible. Into this breach, project revenue bonds (distinct from general obligation bonds) would emerge. In this manner (as Briffault, 2013 has argued), government commenced a longstanding “bypass” of much of the Court’s ruling (and G&L clauses), preserving in a different form government and private corporation financing linkages.
Goal Complexity in Redeemer Policy Systems
Southern policy systems (politics) after Reconstruction bear little resemblance to northern Big Cities. Redeemers sought “redemption”—initially defined as ending Reconstruction, ousting carpetbaggers, removing military districts and preventing upward political/economic mobility for blacks. Redeemers wanted to preserve as much as possible the pre-Civil War way of life. Post-Reconstruction, Redeemers set up (and dominated) a one-party (Democratic) political system (the famous Solid South), approved Jim Crow laws and maximized power in Congress. The one-party South lasted for nearly one hundred years. For all practical purposes, there was little effective opposition party in southern states/communities for five generations.
Pre-1910 municipal and county southern government was home-bred Jeffersonian/ Jacksonian weak mayor/executive. Participation in policy-making was limited to the planter/service sector and a few New South business elites. With little bureaucratic capacity or professionalism, this form of government fit an elite-dominated agricultural economic system. Low taxes were its chief policy goal—that meant few services. By no means were low taxes/low services purely an economic development strategy; they reflected the natural proclivities of those involved in policy-making as well. Certainly, planter Redeemer elites resisted industrialization as a threat to their agricultural/export economy. Generally dominant in state and community policy systems, planter Redeemers were a substantial barrier to urban/industrial economic development. While they never totally denied the South’s need to industrialize and establish a modern transportation system, the debate over the level/intensity of industrialization created a serious split within Redeemer elites. The debate was whether industry/rail infrastructure should serve an agricultural-export economy, or whether the South should industrialize to integrate into the Northern economy.
Redeemers bifurcated into two policy types: planter (agricultural oriented) and New South (industrial oriented). This split persisted through the 1930s. Mississippi’s Depression-era “Balance Agriculture with Industry” (BAWI) economic development initiative testifies to the persistence of bifurcated Redeemer elites. Redeemer elites were (as Woodward argues) of “divided mind” in regard to industrialization, urbanization and economic development. New South Redeemers, rarely dominant in state governments until the early twentieth century, were the well-spring for Southern economic development. New South Redeemers, epitomized by Atlanta’s Henry O’Grady, were determined to overturn the South’s perceived colonialist-like Northern hegemonic domination. In time they developed a shared culture which Brownell (1975) characterized as a southern “urban ethos.”8
New South Redeemers have been described as:
thousands of young people … who left the countryside in a calculated risk to seek their main chance in the cities, to pursue new jobs and new urban ways of living [entering into] a broad middle class of merchants, financiers, manufacturers and professionals … a few emerged to build great fortunes and take their places as leaders of business and civic affairs. (Doyle, 1990, p. 87)
New South Redeemers gathered momentum during the 1880s, found support from city newspapers and contested for leadership of chambers. If successful, they pursued manufacturing, retail and business services growth for their cities. They were a generational cohort that, in the last years of the nineteenth century, superseded the older, traditional planter Redeemer class. Acquiring power in the late 1890s, they dominated larger municipalities into the 1920s. New South Redeemers mirrored in many ways the Silas Laphams of post-Civil War Big City business a quarter-century earlier.
Woodward asserts that post-1870 New South Redeemers pushed “a constant theme … cheap resources, business opportunities, railroad developments, and commercial enterprise” (1981, p. 6). Cobb explains why:
investment capital was relatively scarce in Dixie, but the South was rich in natural resources and blessed with an abundant supply of workers. Consequently New South promoters aimed their sales pitches at labor-intensive industries that would prepare agricultural products and raw materials for final processing elsewhere. The manufacturing operations they courted employed few skilled workers. Wages were minimal, and many owners preferred rural plant locations where they could draw on a surplus of agricultural labor. (Cobb, 1993a, p. 2)
From the new Redeemer perspective ED wasn’t so much stealing as drawing on the region’s few strengths. In the end, this ED strategy never generated sufficient momentum to break away from its agricultural chains.
Northern Infrastructure: Not-So-Friends with Benefits
As late as 1880, east of the Mississippi South had installed only 13,250 miles of rail. In the decade that followed that exploded by 108 percent to 27,600 miles. Texas, Arkansas and Louisiana (west of the Mississippi) increased trackage by over 211 percent in the same decade. Over 180 southern railroad companies were established as well. About $150 million was invested in southern railroads between 1879 and 1881 alone. By 1882 New Orleans was finally linked by rail to San Francisco. By 1890, however, half of the southern railroad mileage was controlled by a dozen northern-owned companies. In the Panic of 1893, banker J.P. Morgan got the rest (Woodward, 1981, p. 120).
Colonization was not without its benefits. Northern investment functioned as a bulldozer, removing obstacles to change by the sheer power of money and organization. For example, a critical weakness of southern railroads was its 3-inch differential in gauge (width of track) of its rails compared to northern railroads. Shipments across regions meant breaking bulk and transferring goods to different trains. All 13,000 miles needed to be replaced with correct gauge rail. Starting at dawn on May 30, 1886, an initial 2000-mile section was replaced by 8500 workers in 16 hours; that same day the same workers adjusted 300 locomotives and 10,000 pieces of rolling stock (Woodward, 1981, pp. 123–4).
The same could be said for the iron, steel and coal industries. In 1879 Northern and English syndicates invested in the Tennessee and Virginia mines and furnaces. A decade earlier, the same railroad which had adjusted its gauge (the Louisville and Nashville) had invested in central Alabama mines, and had begun laying tracks and connecting lines to get coal to urban centers under speculative development. Birmingham, Ensley, Bessemer, Helena, Aniston and Talladega Alabama sprang up; by 1887, 32 furnaces, a $30 million investment, were in operation. Alabama steel production increased over that decade by 1000 percent:
By the late eighties, the South was producing far more pig iron than the nation produced before the war; investment in blast furnaces was mounting faster than any northern state; and between 1876 and 1901 pig-iron production increased seventeen times in the South and only eight times in the country at large. (Woodward, 1981, pp. 126–8)
Northern corporations controlled the South’s manufacturing output; they imposed the well-known Pittsburgh Plus steel pricing. That price system worked to the South’s disadvantage. If there was a silver lining, the North consumed steel and raw commodities the South produced through World War II. During those years a low-wage southern (mostly white) proletariat acquired industrial experience. Between 1869 and 1899 the 11 Confederate states annually increased real value-added manufacturing by 7.8 percent compared to 5.8 percent nationally; and between 1899 and 1929, the South grew 5 percent versus 4.4 percent nationally (Wright, 1986, p. 61, Tables 3–5). The South was slowly industrializing. But, in 1860, the South possessed 17 percent of the nation’s manufacturing firms; by 1904 that had fallen to 15 percent (Woodward, 1981, p. 140). The “industrial” gap between North and South had not closed at all, despite significant investment in southern manufacturing.
Industrialization was slow and incomplete (vital machine tools sectors, for example, never developed in the South), and the South’s labor force remained mired in a low-wage environment, isolated from northern labor markets. Post-Civil War southern industrialization never reached critical mass sufficient to transform the South’s economy or shatter its crushing poverty. In frustration, northern investment was viewed as investment by a conquering nation. The Civil War was the recent past; Confederate veterans still alive, and “the lost cause movement,” raged throughout the South. Through devices like Pittsburg Plus steel pricing, southern industry served northern firms rather than southern purposes. Profits flowed north, but northern investment poured south. That northern investment, mostly by northern railroad companies, ameliorated a first-rate southern ED deficiency. With access to its own financing and a half-century of managerial expertise northern railroads had installed the critical southern transportation infrastructure. The railroad corporation had become the South’s primary transportation EDO.
The railroad corporation as an EDO sounds remarkably out of place in contemporary economic development. It feels “so wrong.” But, hatred of railroads aside, while it may have served larger corporate ends, railroad company installation of the South’s core rail infrastructure took the burden off southern governments. The forms of public/private partnership used in this style of infrastructure development differed from that discussed in previous chapters. Gift and loan clauses to the contrary, southern states especially (and western cities in the next chapter) were joint financial partners with railroad corporations through grants, loans, bribery and delegating public powers of eminent domain—and in some instances, bond issuance to the railroads. In return, aggressive railroad tourism and people promotion followed. In these years it was not so much a problem.
Southern City-Building
Southern city-building exploded in this period, tied to a railroad infrastructure, northern investment and the development of an industry sector. But there was one major caveat: the South’s industrial revolution, unlike the North’s, was not accompanied by rapid urbanization. Towns developed, but few major cities emerged (Schulman, 1994, p. 5). Small-scale urbanization, such as mill towns, did occur. Lumber/mining sectors fostered small town city-building as well. Sawmills developed into mill towns. Another rising sector, southern-financed tobacco and cigarette manufacturing, also matured during this era. In such urban centers, former farmers, bound literally for hundreds of years to the soil and rural life, received their first acclimation to urban life and industrial work in the mills. This is faint praise indeed. Similar to immigrants and tenement houses, the mill towns were what they were, but they were characteristic of the South’s early industrialization.
Birmingham, Alabama
The purest example of southern industrial city-building in this period was the “satellite” city, Birmingham being the most successful. Financed by iron/steel firms, satellite cities formed around blast furnaces and grew dramatically. Railroad and northern investment combined with southern surplus agricultural labor were key ingredients. Birmingham, arguably the leader of the pack, deserves a closer look. Birmingham had incorporated in 1871. Surrounded by rich deposits of coal, limestone and iron ore, connected by rail and with financing by northern investors, it quickly became a southern boomtown and an “instant city.” Its factories, furnaces, jobs and population were initially located in a ring of satellite towns outside the city limits. Birmingham had the last laugh, however: it annexed the towns. In 1900, with its population at 40,000, the “Greater Birmingham Plan” sailed through the state legislature and the city annexed a number of surrounding suburbs/unincorporated areas (and their steel facilities). In 1920 its population reached 179,000, almost the same as Atlanta, the South’s third most populous city.
Both a Business Men’s League and a Merchants and Manufacturers Association were formed in 1909, ensuring that the one-percenters and the general business community had a place to go. In the same year the Birmingham Commercial Club moved to a new “ten-story skyscraper” and changed its name to the Chamber of Commerce. Brownell contends that the general business community was not an active participant in economic development policy during these years, leaving that responsibility to the one-percenters: “the most controversial and hotly debated issues of the period were not economic, but moral or religious in character (the issues of prohibition, Sabbath observance, and public dancing were especially important in Birmingham” (Brownell, 1975, pp. 49–55).
Birmingham, very much the blue-collar city, sprawled and built its copycat skyscrapers. By 1924 its working class, employed in the city’s 788 manufacturing firms, exceeded 100,000. About 15,000 worked in the steel mills, and over 5,000 in iron ore mines. Many continued to live on the outskirts or in company towns; unionization was minimal and labor strife (after crushing the 1908 miner’s strike) restrained. Blacks (40 percent of the city’s population in 1920) were increasingly driven from industrial jobs. Pittsburgh Plus pricing, in effect since the 1880s, constrained growth; Birmingham was among the first to cut production during the Great Depression.
Miami, Florida
Miami was a speculative dream of industrialist Henry Flagler (co-founder, with John D, Rockefeller, of Standard Oil; the lawyer who drafted its corporate charter) (Brands, 2010, p. 94). First developing luxury hotels in St. Augustine (Florida), Flagler then bought a railroad, extended it to Daytona, and then to West Palm Beach. Only then did he incorporate a tiny village he called Miami (1895). In Miami, Flagler built a tourist hotel, a rail terminal, an electricity plant, a sewage system and water works; he helped establish public schools and donated land for a town center; and then he built docks and wharfs. In a village of only 260 (in 1896), he started a newspaper: the Miami Metropolis.
In 1911 Flagler brought the Wright Brothers into town to show off their planes. Flagler’s Miami promotion cross-marketed his Florida East Coast Railway on which local residents could travel to the “land of sun-bronzed men, beautiful women, eternally youthful—working, playing and actually living in the fullest sense of the word.” So visit “St Augustine, Ormond, Daytona Beach, Miami, the romantic Keys and finally Key West … Modern hotel accommodations to suit both your taste and purse … Through Pullman service to all East Coast Resorts.” When Flagler died in 1913, Miami had grown to 13,000 (Ward, 1998, p. 64).
Miami’s story was not over with Flagler’s death. E.G. Sewell, a Kissimmee native, arrived in Miami’s early years and opened up a shoe store. In 1914, after perusing a newspaper article, Sewell got to thinking. Sensing that during World War I Americans would not vacation in Europe, he concluded they would be open to an alternative—so why not Miami? “So he passed the hat … and in two weeks raised $3,000 for tourism promotion.” Advertising worked; that winter (1915) 5000 tourists came to Miami. Sewell was quickly elected president of the Miami Chamber of Commerce, and there was no looking back for Miami tourism: “The chamber filled the trains with sacks of literature featuring photos of scantily-clad women acquiring tans … and the tourism flourished” (Mead, 2014, pp. 224–5).
In the early 1920s southern state/municipal advertising revolutionized tourism promotion. Resort tourism had been significant for several generations, but that promotion was mostly private: railroads, hotel cooperatives and other, usually local, private interests operated the campaigns. In the 1920s, however, tourism promotion shifted from coastal resorts to “warm and sunny” coastal cities—but it also shifted into the public arena. “Follow the sun” vacation tourism flourished, pioneered by a raft of southern state EDOs (Florida, Virginia, North and South Carolina, Alabama) and municipal convention and visitor bureaus. The Florida state Bureau of Immigration (1925) added its two cents to state-promoted tourism. If we were to focus on tourism alone, the Sunbelt began as early as the twenties.
Annexation
Annexation played a major role in southern city-building during this period, accounting for much of early twentieth-century southern city growth. Between 1900 and 1920 Atlanta’s population increased by 123 percent and its territory by 138 percent; Birmingham’s population grew by 365 percent and its area by 695 percent; Knoxville’s citizenry increased by 138 percent and its size by 555 percent; meanwhile Nashville, the least aggressive, expanded by a measly 90 percent. (Goldfield, 1982, pp. 129–30) Land speculation and the drive toward central city peripheries, typical of northern Big Cities, was replicated in larger southern cities. Streetcar companies played the same role described earlier in our Big Cities. Periphery and streetcar expansion drove Richmond’s early 1900s’ multiple annexations and led to inventor Frank Sprague’s transportation innovation. Unlike the North, however, a few wealthy suburbs got annexed (Edgefield in Nashville, for example). Goldfield argues that annexation tapped into southern municipal boosterism and a pro-growth, urban competitive hierarchy (Privatist) mentality (Goldfield, 1982, p. 99). Maybe so, but when northern municipal annexation was drawing to a close, southern annexation was just starting.
Southern Chamber-Style Economic Development
The South relied upon chambers as its primary EDO. Southern chambers, however, did not mirror the post-1900 North’s Big Cities shift to the general business community. The big hitters of the northern hegemony were, by definition, not resident in southern chambers. The South did not establish many municipal research bureaus. Southern business elites and out-of-town northern corporations uneasily dominated southern large city chambers. Southern chambers were more often havens of the community’s top echelon business leaders and plantation gentry. Professionalization of chamber leadership, however, did catch on in the South. From professionalized chambers New South Redeemers pushed industrialization, and did what they could to attract investment and facilitate manufacturing.
Following the Philadelphia Centennial of 1876, several large southern cities joined in the “exposition movement”:
+ Atlanta (1881) held its International Cotton Exposition
+ Louisville followed in 1883 with its Southern Exposition (15 acres of floor space).
+ In 1885 New Orleans held a Centennial Exposition (33 acres of exhibits).
+ Atlanta again in 1887 organized the Piedmont Exposition and later (in 1895) repeated its International Cotton Exposition).
+ In 1897 Nashville held its Centennial Exposition, complete with a replica of the Greek Parthenon.
Woodward describes these expositions as “modern engines of propaganda, advertising and salesmanship, geared primarily to the aims of attracting capital and immigration and selling the good” (Woodward, 1981, pp. 124–5). In the North, expositions “made a statement” announcing the coming out as a Big City on the national, if not world stage. Southern expositions competed more for regional leadership, and business investment.
Chamber-driven New South industrialization and municipal economic development, however, was uneven, as demonstrated by contrasting the Charleston and Atlanta chambers.
Charleston and its chamber
The Charleston chamber embraced the low-tax, low-service planter Redeemer model. The chamber, accordingly, was a major leader in South Carolina’s 1871 Taxpayers’ Convention—which attacked the Reconstruction-era state and local Republican governments. The Charleston chamber, however, did provide (in 1884) an opportunity for William Trenholm to advocate a New South path for Charleston.9 Trenholm distrusted relying on a traditional agricultural-based economy and a Jeffersonian farmer-planter model. He pushed instead not for industrialization but for trade (with South America), and for Charleston to take advantage of its coastal position and turn to the sea (fishing/fisheries) for economic development. Trenholm stressed transportation infrastructure; but his message fell on deaf ears and he left South Carolina, eventually settling in New York City. The chamber remained the bastion of Charleston’s Old South for the next half-century.
Charleston had its problems in the decades that followed. Unable to develop favorable railroad connections linking it to the Carolina interior, the city compounded its infrastructure weakness by failing to construct direct railroad connections to its port and harbor facilities. Cargoes had to break bulk and travel by mule from sparse railroad terminals to the docks. Then Charleston got into a multi-decade “pitch battle” with white supremacist Governor (later Senator) Benjamin “Pitchfork” Tillman, who led a hinterlands and “upcountry” populist movement that hated Charleston’s old entrenched plantation gentry. Reaching a nadir of sorts during the Panic of 1893, younger Charleston New South businessmen, infused with new German and Irish merchants, formed an informal Young Men’s Business League (1894), and for the first time New South Redeemers controlled a viable mechanism to affect economic development.
The League began with a movement to establish a Freight Bureau to speak with one voice to railroads, maritime shippers and harbor facility owners:
The Charleston Freight Bureau … became an agency of the municipal government [corresponding to NYC’s Department of Docks] … The league came to form a broad-based active force whose main purpose was to agitate for change and to confront the railroads, the city government … not the least of its roles was to embarrass the elders of the Chamber of Commerce, the Cotton Exchange, and city hall to nudge them into action. (Doyle, 1990, pp. 175–6)
By 1896 the League had grown to 250 members.
In a larger sense their success came at a time when the post-Civil War Charleston elites were literally dying out. A change of generational leadership had finally materialized—in the 189s.The League turned to tourism and convention promotion as their next economic development initiative. Their first success, a convention of South Carolina Civil War veterans (1898), fostered internal cohesiveness and confidence.
They needed it because Governor Tillman passed a liquor dispensary law that made Charleston “dry” and established a metropolitan police force to enforce it. That did wonders for South Carolina War veterans. Dogged, the League put together a bid for the 1898 national Confederate veterans’ conference and, against all odds, won. The reunion brought 30,000 veterans to a city of 56,000. Moving on, the League won bids for the League of Municipalities, the National Education Association and Fire Chiefs of the United States and Canada (Doyle, 1990, pp. 177–8). In these endeavors, and others described below, the League joined with Robert Goodwyn Rhett, newly elected mayor (1904) for two four-year terms.
From December 1901 to May 1902 Charleston, following the success of Atlanta and Nashville, held the South Carolina Interstate and West Indian Exposition. Nearly 700,000 tourists attended—although a “special Negro exhibit” generated a boycott by Charleston’s black community. Stock subscriptions, business contributions and bonds by the Expo organization financed the Expo, and the city made its “chain gang” available for Expo use. The Expo introduced “new people, new capital, new industries … and gave voice to the … New South vision of economic development and social progress” (Doyle, 1990, pp. 182–5). In the wake of the Expo, in 1902 Rhett resituated the business elite that had conducted the Expo and permanently institutionalized it by forming the Charleston Commercial Club. It informally merged with the Young Business League and set up a four-story commercial club:
as a modern alternative to the “ancient chamber” … but was a serious, self-consciously progressive organization whose mission included the economic development of the city, municipal government reform, and social uplift. It boasted special committees on advertising [business attraction], new industries, good roads, health and sanitation, and suburban development. (Doyle, 1990, p. 186)
Within a year, membership reached 500.
The 1898 Spanish–American War provided yet another opportunity. Convincing the military to use Charleston as a staging area for an invasion of Cuba, city leaders— aware the navy was dissatisfied with its existing port at Port Royal—secured now Senator Tillman’s cooperation, and the League coordinated a city campaign to attract a naval yard, dry dock and port facilities. This required, among other things, a modern water supply system and direct rail connections—which city and business cooperated to complete successfully in time to win navy approval:
The coming of the navy yard brought a huge stream of federal monies, estimated at $15 million … a payroll of $.5 million annually. By 1913 the navy yard was said to support one-tenth of the Charleston area labor force and supply one-fifth of the wages … . Beginning in 1912 … [in] an area once considered inhabitable, a new industrial park and waterfront facilities were laid out in a five thousand acre development. (Doyle, 1990, pp. 180–82)
If Charleston had missed the economic development boat in previous years, it caught up in the first decades of the twentieth century.
Atlanta and its chamber
Young, rapidly expanding Atlanta, with a distinctive political culture different from Charleston, competed with all rivals to lead the New South. Atlanta was always a railroad hub—that’s why Sherman burned it down (Stone, 1989, p. 14); and postReconstruction, Atlanta, like a magnet, attracted northern railroads and investors— enhancing its self-image as the regional metropolis of the southeast. The rebuilt Atlanta that resulted infused northern perspectives and values into its business elite. Northern elites influenced Atlanta’s politics and chamber of commerce (McKelvey, 1963, p. 28),10 setting both down a path which, about a hundred years later, would make Atlanta the capital of the New South, the model of new southern race relations, and driver of the rising Sunbelt economy.
Atlanta’s real pre-1900 distinction, an early forerunner of its future leadership during the civil rights era, was its keynote speaker at the 1895 Cotton States and International Exposition: Booker T. Washington (Mead, 2014, pp. 127–8). In that opening speech Washington proclaimed the famous “Atlanta Compromise” which described his approach for race relations and African-American economic/political evolution. The Atlanta Compromise outlined how southern blacks could urbanize (which they increasingly did in the 1890–1910 period) and participate in southern industrialization (which did occur in sawmills, railroads, and coal mining); and advocated increased “industrial education” as the path for African-American entrepreneurial capitalism—a black middle class.
Promotion/attraction has been considered a defining attribute of southern-style economic development. If so, the best example of municipal-level ED promotion is Atlanta. In 1880 it was home to only 37,000+ residents, but for the first time it surpassed Savannah (32,000) as Georgia’s largest city. Henry W. O’Grady, editor of the Atlanta Constitution, the foremost New South Redeemer, pushed Atlanta to become the “capital of the New South,” competing against Old South’s Richmond and New South’s Birmingham. Advertising and promotion seem to have been part of Atlanta’s DNA. As early as the 1880s “a spate of advertising brochures poured from Atlanta, and many other [southern] towns and cities followed suit” (Richmond Virginia for example) (Ward, 1998, p. 157).
While O’Grady died young (at 39 in 1889), the Atlanta chamber “self-consciously attempted to keep the Grady spirit [alive]. Racial moderation, overtures to the North for investment and workers, and a focus on building up industry would be themes to which it would constantly return” (Mead, 2014, p. 128). Boosterism and promotion seemed natural in its competition for the southern leadership; in 1886 a Massachusetts newspaper called Atlanta “one of the best advertised cities in the United States.” In 1890 another newspaper in its old rival, Richmond, directly equated Atlanta’s growth with its ‘determination to leave no opportunity underutilized to advertise the advantages which it has to offer’” (Ward, 1998, p. 157). This tradition continued for over 30 years; a 1920s southern commentator proclaimed; “There is no God but Advertising and Atlanta is his prophet” (Tindell, 1963).
In 1924 the Atlanta Chamber established an industrial bureau whose purpose was to bring new industry to Atlanta. Fearing competition from Florida, the following year Atlanta redoubled its commitment to advertising and attraction; in 1928 the chamber
ramped up “the most aggressive city marketing machine ever created up to that time, the Forward Atlanta Commission.”
[T]his bold initiative was fully supported locally with a major fund-raising drive. The biggest subscribers were the City itself and Georgia Power … next came the banks … [and] Fulton County … Locally based Coca-Cola (and over 10,000 smaller subscribers as well) … By the end of 1929 over $500,000 had been spent on advertising on a wide range of magazines and trade papers, together with newspapers in New York, Chicago, Detroit, Cleveland, Boston, Miami and Greenville, South Carolina. (Ward, 1998, pp. 157–8)
Atlanta became the model for southern municipal promotion campaigns. But that raises the question of piracy and whether southern chambers were especially prone to that noble activity. By the 1920s chamber-style ED attraction of manufacturing firms with incentives, industrial bureaus, industrial parks and advertising were pillars of this style of economic development—no matter the region. Chambers in the South did the same; Atlanta, of course, more so—but with one difference. A southern chamber’s neighbors had few, if any, manufacturing firms that it or the North could steal. If a southern chamber wanted manufacturing firms to diversify the jurisdiction’s local economy, it wasn’t getting them from cotton towns down the river. The North was where manufacturing was. What was different was that the public sector was a more active, and an independently aggressive, participant. Industrial attraction was a public sector priority in the South—much less so in the North.
The South pioneered an ED municipal tax tool. In 1916, the Amarillo Board of City Development was empowered to finance itself by levying a tax. As one might expect, a proper “stir” resulted, with many chambers believing the Amarillo Board had compromised chamber independence by linking its activities to a public tax. Upon further reflection though, Texas chambers suspected that Amarillo might be onto something, so more Texas chambers adopted the model on the premise that, if ED and business attraction was benefiting everyone in the community, then everyone should pay. Ultimately, the model shifted in that Texas chambers raised money from members, thus maintaining independence while simultaneously contracting with the city for economic development programs (Mead, 2014, p. 224). This tale is the forerunner of the 1979 Texas Development Corporation Act that created “a” and “b” development corporations in most every Texas jurisdiction. Present-day (post-2001) Chapter 313 allows quasi-public development corporations to finance activities through local taxation. That Texas twig was bent pretty early.
It is clear the South’s chambers and municipalities had by the 1920s embarked on a policy to build a manufacturing base, intending to close the gap with the industrial North through attraction. Southern municipalities, however, were not “creatures” of state programs; they independently established their own recruitment programs.
Southern cities entered into vigorous competition to attract industry through tax exemptions, free sites and outright bonuses … Savannah booster, Robert M. Hitch wrote in 1929 that “industrial enterprises are among the greatest builders of our cities”, and accordingly Savannah “has assiduously fostered the prosperity and expansion of the industries she has, and is pursuing an undeviating policy of encouraging the coming of others”. Savannah’s “undeviating policy” included a five-year tax exemption, free water and cheap labor. (Goldfield, 1982, p. 188)
The New Orleans Port Authority
In 1835 New Orleans was the world’s largest port; by 1900 it had fallen to the 12th largest port of the United States. The decline prompted port-related business (especially the New Orleans Steamship Association) to request the New Orleans Board of Trade to exert political pressure to secure state legislation for an empowered port authority. Authorized by Louisiana state legislation (1896), a municipal-level authority governed by commissioners appointed by the governor from local nominations “predominantly identified with the commerce or business interest of the Port of New Orleans”—in other words, the New Orleans Port Authority. Nominations were controlled by the businesses that previously owned the port and marine facilities.
Initially the Authority acquired privately owned jetties, wharves and piers—and then was stymied. It was only in 1908 that the Authority undertook projects financed by its first issuance of authority bonds. While New Orleans was taking its own sweet time, rival southeastern coastal cities (Galveston and later Houston) stole its export trade. Despite its rather dismal performance, the “lock” over the appointment process detailed in the original state authorization ensured that Privatist control of the New Orleans Port Authority was not effectively challenged for generations (Azcona, 2007). The New Orleans Port legislation was the complete opposite of the Boston Port Movement.
THE OTHER SIDE OF THE STORY: THE SOUTHERN TEXTILE INDUSTRY
What happened when the South developed its own manufacturing capacity through southern entrepreneurial activity? It could work if it had a natural advantage, like tobacco and cigarette-making, but if the sector had existing rivals things got complicated pretty quickly. An oozing sore opened up between New England (Massachusetts, Connecticut and Rhode Island) and the Carolinas/Georgia during the 1880s. At issue was the initial rise of the southern textile industry.
Massachusetts (and southern New England) dominated America’s early industrial revolution by virtue of its gazelle textile processing-apparel and machine-building industries started at the turn of the nineteenth century. That initial start translated into a regional agglomeration by the century’s end. New England in 1880, with 8 percent of the nation’s population, accounted for 20 percent of the nation’s manufacturing employment. Nearly half of New England’s manufacturing employment worked in textile-related industries; 80 percent of the region’s textile employment ranged in an arc 20–60 miles around Boston; and one-half of the nation’s textile workers hailed from New England (Rosenbloom, 1998, pp. 4–5).
If there were an industry the South could have dominated, it was King Cotton. Cotton growing was one thing, however, its processing and manufacture of cotton products quite another. The South lacked transportation infrastructure until the early 1880s, so cotton was inaccessible to its own firms; it was instead transported by sea to New England and other processing centers (Great Britain). That changed in the 1880s. The key to southern textile industrialization was surplus labor. Post-Reconstruction decline in the Carolinas’ farm size and growth of share cropping dispossessed poor whites who subsequently migrated to new mill towns founded by startup textile mills: “From the 1870s to the end of the century [southern textile] employment grew at nearly 10 per cent per year with no detectable upward pressure on wages” (Wright, 1986, p. 130). In 1880 southern wages ranged 30–50 percent below northern equivalents. After Reconstruction (1876), however, southern investment in its textile sector exploded. In 1880 Massachusetts alone employed over 60,000 in cotton manufacturing; and North/South Carolina and Georgia about 11,000 (Wright,1986, p. 127, Table 5). Southern employment almost doubled between 1870 and 1880. By 1900 one half of the South’s looms were within 100-mile radius of Charlotte: Greenville, Salisbury and Spartanburg (the Southern Railway) (Goldfield, 1982, p. 124ff). Textile mills required building new towns—company towns:11
The mills clustered around towns and transportation facilities. Their local supporters were merchants and landowners in the town and surrounding areas. Their rhetoric was boosterism, the town as a collective enterprise … the supply of cheap labor was the key to the continued growth of southern textiles over the subsequent half-century … [But] with the rise of the cotton mills, the poor whites were welcomed back into the service of the South. (Wright, 1986, pp. 44–5)
The mills typically were set up outside city limits to avoid taxation. The basic unit of production was the “family labor system,” with female and child labor heavily relied upon. Often employers constructed housing, but seldom schools. Initial investment for these mills often came from “cotton mill campaigns” whereby the community in a semi-evangelistic, patriotic, crowdfunding movement (“Next to God, what this town needs is a cotton mill”) raised capital by selling stock in 50-cent lots. Mill towns grew through the 1920s. Annexation was common in later years; small town urbanization resulted, and the southern textile industry painfully came into existence—on its own!
As the southern textile industry gathered strength, it attracted northern capital investment, particularly from New England’s textile machinery manufacturers. Investing in the South’s developing textile sector diffused the latest and greatest textile-producing technology to young southern mills while increasing New England textile machinery profits. The specialized machinery companies, offspring of the New England textiles parent, played the role of aggressive propagators of grandchildren who would ultimately destroy their own grandparents. As early as 1881, northern textile machinery manufacturers were well represented at Atlanta’s International Cotton Exposition (Wright, 1986, p. 131). But New England’s textile manufacturing dominance gradually faded after the 1880s.
The concentration of textile and footwear production in New England up to 1880 reflected the region’s pronounced comparative advantage in these activities. After 1880, however, a series of events began to undermine the sources of this advantage … New England manufacturers now found themselves competing against lower cost producers in other parts of the country … . [New England’s] poor transportation links to the growing interior population, and limited natural resources endowments meant that it was poorly positioned to compete in many of the rapidly growing manufacturing industries … it is not especially hard to explain, the region’s relative decline after 1880. (Rosenbloom, 1998, p. 2)
Post-1890, disruptive textile innovations—“ring spinning” made obsolete New England’s traditional “mule spinning” and the 1894 Draper automatic loom—transformed weaving, increasing the importance of cheap labor as the primary price differential in the final product. All of this strongly suggests the textile industry had entered into a Markusen stage 3/4 cost-minimization/price sensitivity environment. New England manufacturers retained competitiveness in high-quality production of skilled labordependent fabrics, but lost market share in low-cost textile manufacturing. At this critical juncture (the 1890s), however, New England owners were not willing to invest in new machinery or reconstruct facilities at their original sites (Rosenbloom, 1998, pp. 9–13). Disruptive technologies disproportionately went south. Why?
New England textile manufacturers were fully aware of potential implications from introducing innovations into southern textile mills. The challenge of the southern textile industry was apparent to all—especially when the Panic (Depression) of 1893 hit New England textile-related industries like a ton of bricks. New England textile bankruptcies, unemployment and emotions ran high throughout the 1890s. Industry reaction to this disruption, however, was captured by an 1897 Arkwright Club of New England report.12 Arkwright reported:
the fact that labor is cheaper in the South; that the hours of labor are longer, and that there is neither any of the restrictive legislation urged among us by the labor unions … nor any prospect even of an early agitation in behalf of such restrictions … So far as we could learn there is no disposition to organize labor unions. (Cited in Woodward, 1981, p. 307)
Shades of state business climate comparisons and right to work laws!
Massachusetts manufacturers initially turned to their state government for help. In early January 1895 “representatives of three of Lowell’s largest corporations appeared before the Massachusetts legislature seeking amended charters permitting them to do business below the Potomac.” In 1897, the Massachusetts Legislature sent a delegation down South to figure it out—“several delegations, representing (textile) manufacturers of New England” followed and “some of the leading newspapers of the East have dispatched reporters to the Southern mills.” As reported in an 1898 Forum article:
They have with one accord concluded that the South has an insuperable advantage in cheap labor, and that the mills of the East cannot at present compete with those of the South without cutting down wages. Hence the general precipitate reduction of wages in New England early in the year [1898]. However, the wage-earners of New England do not seem to agree with their employers … They say that the reduction of wages has diminished the purchasing power of the masses … They also hold that the cheap labor of the South has nothing whatever to do with the stagnation in New England, that everywhere cheap labor means inefficient labor, that high-priced labor always turns out the most product and the best product, and that consequently, the capitalist who employees high-priced labor has the advantage over the capitalist who employs low-priced labor. The effect of these teachings has been to impress upon the wage-earners and capitalists of New England that they are in no danger from the South, or any other country having cheap labor. The unanimity of opinion has lulled New
England manufacturers to sleep by the soothing assurance of immunity from danger; /meanwhile, Southern capitalists have continued to erect mill after mill, and to produce every year a higher grade of work, until the very sand has been dug from under the foundations of the cotton industry of New England. (Dowd, 1898, pp. 438–9) In the years that followed millions of New England textile manufacturer dollars set up/bought into southern mills (Woodward, 1981, p. 306). Unions screamed in protest. Prosperity and jobs returned and the problem and debate subsided.
THE SOUTHERN DIASPORA
What broke the agricultural–export–workforce nexus and overwhelmed the planterRedeemer economy was the Southern Diaspora. It ranks with the Yankee Diaspora and the Great Immigration in its effect on America, certainly in its effect on economic development. Population migration, the exit and enter factor, has proven to be a powerful driver of change in our ED policies and strategies. Importantly, the Southern Diaspora visibly made manifest the potential for regional change—although at the time the immensity of what regional change could do was less appreciated. The diaspora in the pre-Depression years was not a flood, but it still had consequences nevertheless. In the section below the key actors, the destinations and some consequences are discussed; but the diaspora is a work in progress and further discussions will follow.
The sizeable and unstoppable departure of African-Americans starting around World War I captured the national consciousness. That exodus, honored by a special title—the Great Migration—however is only part of the story.13 The southern exodus was not exclusively African-American; two and one-half times more whites than blacks (and Latinos) moved over 75 years. James Gregory estimates that the Southern Diaspora included 8 million blacks, 20 million whites and 1 million southern-born Latinos (Gregory, 2005, p. 14). However this volume honors the special title “the Great Migration” and restricts its use to African-American migration; “Southern Diaspora” includes all who relocated from the South between 1900 and 1975.
Pre-1920 southern extra-regional migration was characterized by whites moving west to farm or to New York, Philadelphia, Boston and Chicago to work in industry. Blacks mostly relocated to New York, Philadelphia and Chicago, but also to farm in Indiana and Kansas. By 1900 over one million southern-born whites and 335,000 African-Americans lived outside the South. Say it another way, 92 percent of blacks remained in the South. With the onset of the Southern Diaspora during World War I, however, the volume, context and character of southern migration changed dramatically.
Gregory discerns three phases: (1) World War I through the 1920s; (2) the Depression and the war years; and (3) post-World War II to the early 1970s. From 1970 onward, the South, while still exporting millions of residents, would import millions more—registering a net increase of population and ending the Southern Diaspora. To put this in perspective, the Census Bureau reported that 32 percent of Americans lived in the South in 1900; by 1970 only 31 percent lived in the South; and by 1980 33 percent were southerners. This section focuses on the first phase only.
The Cotton Belt historically overlapped “the black belt” in which the overwhelming majority of southern blacks lived. The majority of southern whites, however, lived in the outer South—West Virginia through Kentucky, Tennessee, Arkansas, Oklahoma and Texas: “The two major Southern Diasporas would separate along these racial/ geographic lines. The black migration had its base in the cotton belt; most white migrants left the outer South … Motivations also divided along lines of race” (Gregory, 2005, p. 23). The impact of population loss varied by state and within each state. The South Atlantic industrial belt (Maryland and Virginia) actually increased in population.
Phase 1 white migration was different than black migration, not only in the geographic areas from which it came but also in its composition and, to some extent, its final destination. The economic pull factor for each race was shared: the labor shortages in northern wartime industry and the promotion of available jobs by companies and the railroads. So white migrants followed southern black migrants into northern and Great Lakes cities. Less apparent was the white migration to California, primarily Los Angeles and San Francisco. Los Angeles numerically acquired most of the white migrants of all the Phase 1 destinations.
The most likely to leave were young people with blue collar skills … oil workers to California, timber men to the forests of the Northwest, construction workers following the building booms that raged in cities from Detroit to Los Angeles … the West also attracted a substantial number of southerners with money to invest in land and new forms of agricultural production … college students were another element in the [Phase 1] white diaspora. (Gregory, 2005, pp. 26–7)
Interestingly, Gregory observes that white Phase 1 migrants settled mostly in suburbs. Also, “25 percent had found white collar jobs and 20 percent worked as foreman, craftsmen, and other skilled positions, only 22 percent held unskilled … or service jobs.” White migration remained somewhat “invisible,” and white southern newcomers in Phase 1 “were anything but poor and disadvantaged” (Gregory, 2005, p. 86).
The Great Migration undercut the subsistence tenant–sharecropper cotton/tobacco economy. That economic system was the impenetrable wall perpetuated by the Redeemer divided mind, inhibiting southern industrialization and urbanization. The sharecropper/subsistence economy kept down the price of its cotton on international markets; but even with this subsidy the South’s cotton-export system was not sustainable, given the low-wage advantages held by other world regions. But the South’s export economy held up so long as cotton prices were sufficiently high. This changed after World War I; 1910 was the peak year for southern agricultural employment. With cotton prices up and demand high (protected from external price competition by high tariffs) African-Americans stayed in place.14
After 1918 a sort of perfect storm hit the South’s cotton economy. First, World War I disrupted international trade patterns, and, while the demand/price for cotton increased during the war, a slow decline followed. Second, the boll weevil had affected cotton production before 1900, but the blight slowly spread across the Cotton Belt.15 The first areas affected were the Carolinas and Georgia. Wherever the boll weevil went, yields fell, increasing cotton prices and benefiting unaffected areas. By 1922 virtually the entire Cotton Belt was infested. Third, if the boll weevil were not disaster enough, Mississippi River flooding (starting in 1922) affected delta populations. The 1927 Great Flood opened the migration spigot, creating a first-class catastrophe similar to Hurricane Katrina in New Orleans (2005). Economic desperation combined with Jim Crow segregation spurred migration as the best alternative to avoid starvation and obtain civic and political freedom. Poor Afro-Americans from the Carolinas and Georgia, and later the Mississippi Delta, disproportionately constituted the pioneering first wave of the Great Migration (Lange et al., 2008).
Early First Great Migration did not produce a flood of refugees; rather a constant drip, drip, drip that, in aggregate, drove change. During these years the Great Migration was characterized by individuals and small groups who “escaped,” usually by railroad. Lured by the prospect of employment in northern cities and factories—an opportunities advertised by recruiters from northern factories and railroads—they mostly headed up North. African-Americans from the East Coast generally migrated to Philadelphia, Boston and New York. Those from Georgia and Alabama usually headed for Cleveland, Pittsburgh and Detroit. Chicago was primarily favored by African-Americans from Mississippi and Louisiana.
The reality for new migrants upon arrival in an unfamiliar and “strange land,” the northern city, was segregation—driven into the most deteriorated housing and neighborhoods. Employment meant being hired as a strikebreaker, in unskilled and first-fired positions. Initial social-economic reaction to this relatively sudden migration was violent and explosive. The summer of 1919 (referred to as the “Red Summer”) witnessed 22 race riots in cities throughout the United States, with the worst in Chicago. Less visible “communities within communities” developed over the next 40 years. The “second ghetto” was slowly unfolding in northern and midwestern cities. The gradual emergence of the second ghetto affected the practice of CD in these communities—frankly taking the wind from its sails. CD, despite its concern for the disadvantaged, worked in white neighborhoods (mostly). Racial change and neighborhood succession picked up noticeable steam in our Big Cities—and CD got caught into its crosswinds and swells.
In the South, of course, the reaction was different. The hitherto unthought of and impossible prospect of sustained depopulation threatened not only the southern agricultural business model but also a way of life, a culture. Southern chambers and state governments, chastened Redeemer elites and economic developers took notice. The aggressive momentum of southern chamber and state industrial promotion/ attraction during the 1920s was no doubt partially fueled by the background fear of depopulation. Also evident was a bit of “deer in the headlights” inertia. We shall return to that topic in Chapter 9.
NOT SO DEEP IN THE HEART OF DIXIE: TEXAS
Texan cities moseyed down a different trail than the post-Civil War Deep South, for various reasons:
+ Texas attracted an in-migration pattern all its own. The political culture that developed, especially in its interior, was not that of the Old South.
+ Larger than France, Texas supported several sub-regional, metro-sized urban/ economic clusters.
+ The state experienced periods as a colony and independent nation, forming its own distinctive identity/culture previous to joining the Union in 1845.
+ Remarkably isolated and “wild westie,” Texas was off the radar screens of Wall Street and Big City corporate behemoths, allowing local banking and finance systems to operate with some autonomy.
+ While on the edges of the Old South planter economy and politics, a distinctly different cattle/meat-packing agglomeration naturally developed in its interior.
Early twentieth-century discovery of rich oil/gas resources, producing a powerful “platform” agglomeration as the auto industry in Michigan, yanked much of the Old South territories into developing brand new economic bases. And, like it or not, there was something in Texan water that nourished the most unbridled competitive entrepreneurism yet seen on the continent. Texans seemingly evolved a Darwinian gene for the competitive urban hierarchy.
And, Texas being Texas, its distinctive ED (thoroughly Privatist) displayed one characteristic above all—hyperbolic exuberance. Providing muscle for that exuberance was a political process/policy system dominated by its largely self-made business elite and a political culture which seemed “Tidewaterish” given its citizenry’s willingness to follow that elite. Pre-1920 Texan-style economic development is as pure a business elite-driven ED as has ever existed in America. Competing with other cities was evident from day one. Most Texan cities were growth machines from birth, and remain so to the present day. Despite such intense competition, it’s amazing that the present-day urban hierarchy—Houston (1st), San Antonio (2nd) and Dallas (3rd)—has characterized Texas since 1930.
EARLY RISE OF TEXAN CITIES
Eastern coastal/border Texas was part of a Deep South cotton–rice/slave-based export economy—one that caused its reluctant joining with the Confederacy. Coastal regions with only one natural harbor (Galveston) required infrastructure, sustained population growth and new markets to develop further, but Union victory and the geography/ climate of inland Texas halted cotton expansion. Other sectors developed in the inland plains areas. In the early 1870s a network of inland Texan cities formed around cattle-raising and a “get those doggies to market” economy. Thanks to cattle, railroads followed: Houston (1856–61), Dallas (1871), Fort Worth (1876), San Antonio (1877) and El Paso (1881). Serious Texan city-building followed the railroads (Wheeler, 1968, pp. 47–8).
Galveston was Texas’s most populous city in 1870 (almost 14,000), followed by San Antonio (12,000) and Houston (9000). Municipal business elites were already active in city-building and economic development in most Texan cities, San Antonio being an exception: “The business communities of Dallas [Fort Worth] and Houston historically have had more aggressive attitudes toward growth than has San Antonio. Part of the explanation for this lies in the social origins of each nineteenth-century merchant group” (Miller and Johnson, 1968, p. 10). Ethnic immigration flows differed for Galveston, Houston and San Antonio. Aggressive competition among cities typically motivated Texan business elites, but less so San Antonio elites, who mostly competed among themselves to tap the federal military post located there.
Texan Business Cultures
Houston’s business class originated from the mid-Atlantic and New England. The Allen brothers (John and Augustus, from New York) incorporated the city in 1837; they were responsible for Houston’s first railroad linkage with neighboring Galveston and Beaumont (1856). By 1861, of the 450 miles of Texas railroad then existing, 80 percent went to Houston: “This aggressive rail-building program thus laid the foundations for individual fortunes and significant local capital accumulation for further urban investments.” Houston business elites continued their aggressiveness after the Civil War, evidenced by a 1866 business-led public meeting at which “Houstonians approved a coherent blueprint for the city’s future development” (Miller and Johnson, 1968, p. 11). Cotton was the export crop at that time.
Prominent leaders of Dallas business came from the Upper South and Middle West and included John S. Armstrong, John C. McCoy and John Nealy Bryan (the town’s first settler). Incorporated in 1856, Bryan (1866) also “presided over a public meeting in which the fledgling business community laid out its goals for future development, especially railroad connections to Eastern markets” (Miller and Johnson, 1978, p. 11). The goal was quickly achieved in 1871 by businessman William Galson, who raised funds and donated land to steal away the Houston and Texas Central Railroad (H&TC) from another location. These actions were repeated to acquire the Texas and Pacific Railroad connection (that one cost $200,000 in bonds and $5000 cash) (Miller and Johnson, 1968, p. 11). Dallas, too, brought in the railroad as its first step in economic development.
San Antonio, a town built around the state’s largest military base, was originally settled by Irish and German immigrants direct from Europe, and by Deep South businessmen. The electorate and business community were soon dominated by a German and cotton-state southerner coalition. The extremely individualistic policy system that followed distributed benefits to individual businesses, neighborhoods and ethnic groups rather than fostering overall community growth. For many decades San Antonio consistently was unable to reach consensus on a future-oriented communitywide development plan—in contrast to Dallas and Houston. The one major exception was an 1880s’ project that developed a site for a new fort (Fort Sam Houston) in response to the military’s threat to move its existing base unless the city made a suitable site available (Johnson, 1968, pp. 33–57).
San Antonio’s business community lived off the military base, and that installation defined their economic development perspective:
San Antonio has no parallel to Dallas and Houston community commitment to local development; there was no public meeting immediately following the Civil War [and] San Antonio’s major merchants exhibited a striking indifference to … the railroad … San Antonio was the last [1877] of the three major metropolitan areas to be hooked into the national railroad and commercial network during the nineteenth century. (Miller and Johnson, 1968, p. 12) Moreover, San Antonio failed in its early attempt to establish a board of trade (1872), and did not found a chamber of commerce until 1910—decades after other Texan communities (Miller and Johnson, 1968, p. 15).
Houston Port Authority: Digging a Ditch Really Made a Difference
In 1890 Houston, about 45 miles inland from Galveston, was home to about 27,000; Galveston was home to 29,000.16 Connecting the two cities was a not very impressive, shallow sliver of water called Buffalo Bayou. Cargo from large ships would break bulk in Galveston, transfer to barges and ship to Houston via Buffalo Bayou. Houston Congressman Tom Ball got the bright idea to convert that sliver of water into a shipping canal to transform the city into a deep-water port, but he got nowhere for ten years. And then the storm struck.
A 1900 hurricane devastated Galveston. Shortly after the storm (January 1901) oil was discovered at Spindletop (near Beaumont); this was the opening shot of the Texas oil boom. After the storm Congressman Ball persuaded House colleagues to fund 50 percent of the cost to dredge the bayou. All that was needed was the other 50 percent (about $1.25 million). It took some persuasion, but by 1909, with port authorities springing up like weeds, the county formed the Harris County Houston Ship Canal Navigation District (it’s a port authority anyplace else). A campaign commenced for port authority voter approval and bond—both were approved. In January 1911 the Port Authority of Houston went into operation. Shortly after, it issued bonds—but no one would buy them. Jesse H. Jones,17 then a mere bank president, convinced each Houston bank to ante up; the bonds were purchased.
The canal was dredged. By 1920 Houston surpassed Galveston in export tonnage. By 1930 Houston was the nation’s third busiest port, and in the same year became the largest city in Texas. In 2010 Houston’s 2.1 million tons contrasted with Galveston’s 48,000, and by 2013 the Houston Port Authority was the nation’s top port (foreign tonnage) and home to the world’s second-largest petrochemical facility. Houston seized regional advantage from the channel because the city had previously developed into a premier rail hub. Control of the hub allowed Houston to siphon off agricultural produce and raw materials (and financial capital) that otherwise would have gone to New Orleans.
Houston’s success prompted other Texan cities to develop port authorities: throughout the 1920s they were created in Brownsville (1925), Corpus Christi (1926), Post Isabel-San Freeport (1927), Brazos River, (1927) and Benito (1928). By 2013, 16 Texas port authorities were operating. This spurred other Gulf Coast cities to do the same. Florida port authorities were not far behind as Palm Beach established theirs in 1915 and St. Lucie in 1920; Tampa Port Commission was in operation by 1924, and Port Everglades (Broward County) Florida in 1927. Lake Charles Louisiana established its port authority in 1924. These port authorities tapped into the 1910 federal Rivers and Waters Act, which provided the first significant dose of federal funding for what would eventually be an important section of the future 3000-mile Intracoastal Waterway.
Investment capital for both rail and channel (similar to Carolina textile mills) came from the purchase of stock and channel bonds by the general community and local banks, leveraged with state loans, land grants and assistance from the federal government. More investment, and risk assumption, was needed to install pipelines, storage facilities and refineries required for the budding petrochemical industry. Drawing upon eastern speculative capital, Houston entrepreneurs laid pipelines to new refineries (Miller and Johnson, 1968, p. 22). The aggressiveness of Houston business elites, leveraged with state and federal tax dollars, was a dramatic departure from Deep South economic development. Prominent in spurring the animal spirits of Houston’s private elite was an intense rivalry among the business elites of the Houston– Galveston–Beaumont–New Orleans Gulf Coast urban hierarchy.
Dallas—Fort Worth: Competition Makes Good Neighbors
Dallas and Fort Worth (about 35 miles apart), like Minneapolis-St. Paul, have been joined at their respective hips since birth. Despite their geographical closeness, however, the two possess separate identities: “Fort Worth—‘Cowtown’—is ‘where the West begins … [and Dallas] ‘Big D’, is where the East runs out’” (Melosi, 1983, p. 162). Rivals arguably until the 1974 opening of the Dallas/Fort Worth airport, both communities shared a business/economic development culture yet were separated by different lifestyles and economic base: “They existed because their tenacious and aggressive founding fathers brought transportation facilities to them—by hook or crook. Dallas and Fort Worth were built by men with an intense desire for economic gain” (Melosi, 1983, p. 162).
Dallas (founded in 1841) was, by 1870, the regional center/county seat—its economy based on cotton, cattle, sheep/wool, wheat and hides. When the first railroad opened in 1873, the population of Dallas was 3000; by 1890 it surpassed 40,000. By then rail linked Dallas to St. Louis and other eastern cities. Fort Worth, on the other hand, an army post, was established in 1849. Its economy centered on the army and cattle. In 1873 its population had declined to 600, so local businessmen organized a campaign that, by 1876, “bought” access to the Texas and Pacific Railroad; that railroad’s cattle yards did the rest. By 1890 Fort Worth had attracted over 23,000 residents. In 1890 both cities were essentially agricultural processing centers: Dallas, cotton; Fort Worth, cattle/wheat (Miller and Johnson, 1968, p. 18). In their first decades of meaningful economic life both cities had developed into solid, viable and distinctly separate regional economic/political centers, well connected by rail to the outside world. And then the story got interesting!
The rivalry that developed between the two neighboring business elites proved to be as intense and longstanding as any in America. While Fort Worth was smaller, its growth rate was higher than Dallas’s. At the turn of the century it was anyone’s guess which would best the other. After 1900 Fort Worth mounted a determined and successful campaign to make itself a nationally important meat-packing center. Earlier, in the 1890s, Fort Worth’s board of trade had attracted a meat packer to town—pretty logical given that a trail brought cattle into town. To follow up, in 1896 the board of trade held a Southwestern Exposition and Fat Stock Show (we did not make this up!) to market its emerging “cluster.” In 1901 the board of trade helped raise $100,000 cash on the barrel to bring in two additional meat packers—critters named Armour & Co. and Swift & Co. In the lingo of the day, the $100,000 cash was called a “bonus”—and bonuses were usually paid to industrial promoters or “site selectors.” Fort Worth’s subsequent growth (230 percent between 1904 and 1909) cemented the board’s commitment to attraction and incentives as its core economic development approach. By 1914 these two facilities employed 5000 workers, and by 1929 Fort Worth was the state’s largest meat-packing center—an industry outranked in Texas only by petroleum refining (Miller and Johnson, 1968, p. 18).
Not to worry about the shameful use of public and private incentives to attract companies—the Fort Worth Chamber quickly found redemption by hosting a 1909 conference of Texan chamber secretaries. At the conference, it righteously condemned cash bonuses to industrial promoters, expressing a desire “to run them out of the state” (Mead, 2014, p. 163). From that point on, Texas, I am told, has never used an incentive again—yes, Virginia there is a Santa Claus.
Dallas’s strategy, on the other hand, was to diversify its economic base. Building upon its 1880 strength, cotton processing, Dallas expanded that sector into the nation’s largest inland cotton center. From that sector, Dallas grew an agricultural machinebuilding sector into the second largest producer of farm machinery in the world (Humann, 1976, p. 28). Local investors funded the Praetorian Mutual Life Company (1898), Southwestern Life (1903) and Southland Life (1908); and, lo and behold, Dallas developed a home-brewed insurance sector. On top of that, Dallas banks working with the chamber of commerce:
promoted [and financed] an ambitious interurban rail network radiating north and south out of Dallas. As lines progressed, representatives from the chamber made weekly excursions to every town now connected to Dallas to encourage economic ties to their city … By 1906, Dallas was the state’s most important banking center. This campaign to make Dallas a financial powerhouse culminated in 1914 when the city won an intense competition with five rivals (including Fort Worth) to become the headquarters for the Eleventh District of the Federal Reserve. (Miller and Johnson, 1968, p. 19)
If sheer momentum generates its own fortune, Dallas was the unexpected beneficiary of Henry Ford’s unsolicited decision to locate a sales and service center there in 1909 (two employees). Since Dallas bought Ford’s cars, possessed a growing workforce and its banks were willing to finance Ford, a Ford assembly plant was built in the city in 1913. Within a year it was replaced by a larger plant—and in 1925 by a still larger facility:
During the twenties, Dallas became a significant industrial center, at least by southern standards. The number of manufacturing jobs doubled during the decade. Local boosters sought to solidify this boon by formally incorporating industrial development into their strategic planning. In 1928, the city’s financial leaders organized Industrial Dallas Inc., and raised five hundred thousand dollars to fund a four-year campaign to attract even more business. They did quite well. (Miller and Johnson, 1968, p. 19)
Dallas Inc. and Texas lore have since alleged that 1000 companies came to Dallas during that campaign. Whatever! By 1930 Dallas had become the state’s third largest population center. “In retrospect, it appears that Dallas’s businesspeople won this race by adopting a more sophisticated approach to economic development than their adversaries had” (Miller and Johnson, 1968, p. 18). Dallas’s sector diversification strategy beat out Fort Worth’s also successful strategy of cluster agglomeration.
Dallas City Beautiful
Planning in northern City Beautiful cities initially focused on parks. Louisville was as far south as Frederick Law Olmsted Sr. would go (ignoring North Carolina’s Biltmore). The City Beautiful movement, with its preoccupation with parks and wide boulevards, was less successful in the South, including Texas. Shrubs maybe, comprehensive plans no! City Beautiful’s best southern example arguably is Dallas.
The Dallas Civic Improvement League formed in 1902 expressed the fond desire to make Dallas a “more beautiful place to live … [in that] in the whole civilized world there is no more slovenly community than Dallas.” The League’s program included park planning and a special park tax, but in a close referendum they were both rejected (Wilson, 1989, p. 257). The baton was picked up and carried to a successful conclusion by the COO of the Dallas Morning News, George B. Dealey, a close friend of Kansas City’s City Beautiful planner George Kessler. Dealey, enamored with the Harrisburg PA model of City Beautiful, believed that community/business organization supportive of planning was a key lesson appropriate to Dallas. In January 1910, launching his newspaper campaign, Dealey allied with the Dallas Chamber of Commerce to commence a “crusade against ugliness.” Outside speakers were invited and a spearhead organization, the Dallas City Plan and Improvement League (also associated with the chamber) was formed.
Dealey wasted little time getting his friend Kessler on board. Kessler completed his plan in 1912, but its contents clearly revealed that Dallas City Beautiful was not to be a parks and boulevard initiative, or even a civic center complex, but a city “practical or functional” program. Its intent was to clear up the mess made of downtown Dallas by uncoordinated, speculative, incremental development. Its most disruptive proposal was to remove at-grade rail lines that made travel impossible and congestion inevitable. Another major feature was a Trinity River levee to protect the downtown floodplain from its periodic floods. Kessler also envisioned an industrial waterfront port. A third initiative was a unified downtown central railroad station that facilitated at-grade railway removals. Some park development, connecting boulevards and associated playgrounds were also included, but “Kessler scotched all talk of beautification, for this was to be a strictly utilitarian measure” (Wilson, 1989, p. 254).
Significant elements of the plan—such as Union Station (1916) and the removal of the horrendous Texas and Pacific Railway tracks from the CBD—were successfully implemented. But bonds for parks and boulevards were rejected. The Trinity River levee project was built into the 1927 Ulrickson Plan which, in an extended series of projects and bonds, completed the levee, along with parks, water/sewer systems, flood control, library expansion and an airport by 1938. Persistence does work apparently.
The Dealey-led effort culminated in the establishment of a bunch of downtown planning organizations: the Dallas Property Owners Association; the Central Improvement League of the Eastern District; a chamber subsidiary (the Metropolitan Development Association); and the Kessler Plan Association (KPA). Planners as well as engineers were hired, and through the 1920s these organizations guided the development of downtown Dallas. By the end of the decade, however, sustained growth and an unwillingness of Dallas late 1920s “populist” working-class politicians (such as J. Waddy Tate, the “hot dog mayor”) to follow ‘intrusive” planning advice isolated the KPA and it failed in 1932 (Wilson, 1989, pp. 254–78), ending the last of the Dallas City Beautiful program.
NOTES
- These included Savannah, 1906; Roanoke, 1907; Chattanooga, 1910; Little Rock, 1912; Kingsport TN, 1916; Charlotte, 1917; Spartanburg, 1921; Ashville, 1922; St. Petersburg, 1922; West Palm Beach, 1922, Sarasota, 1922; Columbus GA, 1924; and Clearwater, 1925.
- “Legions of immigration societies sprang up, more than a hundred in Louisiana alone. Regional associations … held conventions and published annual proceedings. The secretary of the Southern Inter-State Immigration Association revealed the true state of things, however, when he wrote the governor of Alabama that the support of his organization derived ‘almost wholly from the Railroad Companies of the South … ‘ Twice a month all the main railroads with lines into the South ran special home seekers’ trains at half rates. Small colonies of Midwesterners, Italians, Danes, Swedes, Hungarians and Germans sprinkled the South along the railroads … Dunkers … settled in Georgia and Alabama.” Woodward (1981, pp. 297–8).
- Founders were Richard Edmonds, owner of the Manufacturers’ Record magazine, and Colonel D.B. Dyer, an Augusta Georgia industrialist (Woodward, 1981, p. 291).The association’s headquarters was in New York City.
- Louisiana, South Carolina and Florida had not yet achieved full sovereignty by 1876. Tennessee (1866), Arkansas (1868), and Virginia, Mississippi and Texas (1869) were readmitted to Congress. New state constitutions were mostly approved by 1870. Troops were withdrawn after 1873 from most states, and local self-government resumed.
- Eric Foner asserted: “What remains certain is that Reconstruction failed.” See “Reconstruction: America’s Unfinished Revolution, 1863–1877,” in Francis G. Couvares et al. (eds), Interpretations of American History: Patterns And Perspectives. Vol. 1, 7th edn (New York: Free Press, 2000), p. 409.
- Since 1840s’ southern constitutional amendments were aimed at banks, Virginia, Missouri and Tennessee used railroad corporation charters in the 1850s. The Tennessee legislature (1853) approved a “patriotic and enlightened policy that laid the foundation of a new system of public improvements” using public subscriptions of $10,000 per mile for railroads. Virginia followed suit (also in the 1950s), as did Georgia and Texas: Carter Goodrich, “The Revulsion against Internal Improvements,” Journal of Economic History, vol. 10, no. 2 (1950), pp. 149–50.
- Loan Association v. Topeka, 87 U.S. 20 Wall. 655 (1874).
- Woodward (1981) traced origins of the New South’s ED perspective to pre-Civil War Whigs, in particular Henry Clay.
- Trenholm’s father, George, led the 1866 Charleston Chamber revitalization. George, who likely was the role model for Rhett Butler, was a former blockade-runner and Confederate Secretary of the Treasury. William eventually joined the New York City Chamber, becoming US Comptroller of the Currency in 1886 in Cleveland’s administration. See Mead (2014, p. 126).
- Atlanta formed its Board of Trade in 1866, converting to a chamber in 1871.
- . Textile mill towns were similar to sawmill towns created in other parts of the South. Although the cotton mill inspired crowd-sourcing financing campaigns, sawmill towns apparently did not; northern investors graciously stepped up to the plate instead.
- Manufacturers’ Record, 32 (December 24, 1897), p. 335 (cited in Woodward, 1981, p. 307). Arkwright Club membership consisted of New England’s cotton and wool CFOs/treasurers.
- See Wilkerson (2010); also Nicholas Lemann, The Promised Land: The Great Black Migration and How It Changed America (New York: Knopf, 1991) and Ira Berlin, The Making of African America: The Four Great Migrations (New York: Viking, 2010).
- Because of tariffs, American cotton production was mostly consumed by the US market; postwar international cotton demand increased, but not domestic demand. Military uniforms sustained demand during the war.
- The boll weevil, thought to have come from Mexico, arrived in 1892.
- The Port of Galveston was the oldest on the Gulf of Mexico (established in 1825 when Texas was part of Mexico). Until 1900 the port was the second largest in the nation after New York City. Success of the Port of Galveston (cotton, cattle and rice) prompted New Orleans to form its 1890s’ port authority.
Ron W. Coan 