The twenties: not so calm before the storm

INTRODUCTION

Looking back over Part I, the chapters have been about growth—of industrial Big Cities, southern cities (despite its “divided mind”) and city-building western cities. No matter the region, the bottom line has been growth: what kind, how much, how to do it, who is and who isn’t. Even community developers of the period strive to assimilate the disadvantaged to enjoy the benefits of growth (while staving off civil disruption).

Despite being centered on growth, at this critical junction of the 1920s, the three regions were in very “different spaces”. They didn’t start growing at the same time, and they didn’t develop identical jurisdictional economic bases. They didn’t approach growth in the same way; political culture mattered in how cities in different regions sought growth. So did the impact of the urban competitive hierarchy on policy-making. Growth, like Baskin-Robbins ice cream, comes in several flavors.

During the twenties, growth was in style. Going with the flow, cities/regions enjoyed the fruits of growth: prosperity and good times. Of all the decades researched in this history, the 1920s were one of the quietest in our ED policy history. Life couldn’t be better. Yes, these were Prohibition years, yet persistent rumors of rum-runners, speakeasies and something called the Roaring Twenties suggest otherwise. Economic development as a policy area faded into the background, suggesting that affluence and prosperity lowers ED on the municipal policy agenda. GNP nearly doubled over the decade.

There was a construction boom, new skyscrapers went up downtown; suburban home-building in style, telephones, cellophane plastics, cigarette lighters, Pyrex glass, and modern bathrooms were hot consumer items. The hottest innovation, the smartphone of the day—the radio—blared from every house. Sports were what people listened to. The finishing touches for urban electrification were installed, allowing all sorts of household labor-saving devices to work their wonders (toasters, vacuums, sewing machines). Unemployment started off in 1920 at 5.2 percent, and by 1928 it was down to 4.2 percent. ED’s importance paled when you can go to the movies or foxtrot.

As far as ED went, while off to the side, second wave chamber-style ED was in its golden years, the tail-end projects of the City Beautiful era were finishing up. Port authorities were introduced to airports (and buses). Indeed, economic development itself founded a national professional association. Federal legislation effectively ended immigration by mid-decade, but the Southern Diaspora gathered steam during the twenties Mostly black migrants, however, continued to pour into Big City neighborhoods in everincreasing numbers. The 1919 Chicago race riot was among the worst ever, but in the twenties the Lost Generation and the Harlem Renaissance also raged—mostly unnoticed. But even in Harlem one could see there was a whole lot of shaking going on.Over the decade an estimated 117,000 whites moved out of Harlem and 87,000 blacks moved in. Not that it was mentioned in F. Scott Fitzgerald’s The Great Gatsby (1925).

In 1920 the Census Bureau reported for the first time that a slight majority of the nation lived in “urban areas”. Most people thought Big Cities would grow forever— until the 1930 census came out and “decentralization” became the buzzword of the Policy World. By the end of the decade some Big Cities were effectively stagnant, and a few had actually declined. The Census Bureau detailed “metropolitan areas” and planners talked about “regional plans”. Suburbanization, excuse me decentralization, was the talk of the town—and decentralization had evolved from an optimistic opportunity to a worrisome concern. By the end of the 1930s, decentralization had become the principal concern of Big City economic development for the next 30 years—or more. Still, the competitive urban hierarchy was about to acquire an “intra” metropolitan competitive dimension on top of the usual inter-urban one.

Reflection and the Pivot to Part II

There were “ED things” going on, of course, and several will be discussed in this chapter. But municipal policy systems were digesting their new-found structural capacity, and voters had moved on to other concerns. This allows us the opportunity to look back a bit and reflect, and to prepare ourselves for Part II. Four topic areas will be discussed in this chapter. First, the formation of the American Industrial Development Council must be discussed, and the appearance of states (state-level EDOs and state ED strategy) is a notable feature of the decade. The focus on ED structures allows us the opportunity to reflect on two aspects of our Chapter 1 framework: onionization and siloization.

A second subject, the jurisdictional economic base, opens up discussion on the profit life cycle. Over the previous 50 years or so certain sectors will reach the critical late Stage 3 and 4, and several important new sectors (automobile) leaped from Stage 1 to early Stage 3—and oligopoly. Oligopoly affects economic developers’ ability to manage their jurisdictional economic base, and oligopolistic decision-making calls attention to the “mobility of capital”. Using the Lehigh Valley in Pennsylvania as an example, we will also veer away from Big Cities and review how regional centers handled ED. Finally, we return to our textile industry case study, looking deeply at how agglomeration decline is defined by ED actors and how they choose to manage it. In the process the reader will sense that textile agglomeration decline escalates into an undeclared regional war—a forerunner of things to come. Throughout the entire discussion of the jurisdictional economic base, the reader might also sense that, aside from New England, nobody is paying much attention to its needs, or its evolution. The profit life-cycle is ticking away, but if anything ED is focused more on urban competition, with retention viewed more as preventing firms from moving than addressing their competitive needs. Sitting off to the side of ED’s agenda, the economic base of Big Cities is beginning to look like a time bomb.

Community development is next. There’s a lot going on in this decade that will consume our attention. Still we will find opportunity to take note how CD differs from ED. In particular we call attention to various “wings” within a community development “movement”: wings that will be important in Part II; wings that reveal the considerable “fragmentation” within the movement. Finally, we will segue into decentralization (suburbanization). Unlike much contemporary thought which focuses on post-World War II (fifties and sixties) as the pivotal period of suburbanization, our history strongly argues that the 1920s is when suburbanization entered the ED/CD agenda—and quickly became the hottest topic in Big City economic development. In the twenties most were unsure if decentralization was an opportunity or a threat. In Part II it will eventually be defined as a threat; slum clearance, public housing and urban renewal will revolutionize Big City economic development—and profoundly affect the course this history will take.

The chapter will conclude by returning to growth as the central goal of Part I economic development, arguably the central goal of ED through its history thus far. Parts II and III (and a separate volume currently under way) also center on growth, and its absence—that is, decline—and on redefining growth to accommodate new values and technological change. This conclusion introduces growth and prepares the reader for Parts II and III.

EDOS APPEAR AND MATURE: ONIONIZATION, SILOIZATION DOES ALSO

Glancing over the 1920s’ EDO landscape, much has changed since the 1880s. Chambers are still the dominant EDO and the jurisdictional lead agency, but the 1920s’ chamber is not the 1880s’ one. The closest to the 1880 chamber would be the 1920s’ Municipal Research Bureau. Chambers themselves have professionalized and developed a bureaucratic department, the industrial bureau, to handle day-to-day ED. State variation has already appeared: for example, Chapter 7’s mention of Texan chambers developing a relationship with municipal government to receive proceeds from ED-specific taxes that over time would lead to a development of a “Texan” redevelopment EDO. Tourist and convention and visitor bureaus have been spun off and now dot the jurisdictional landscape, probably housed in the new municipal City Beautiful civic center. State and federal trade associations are also commonplace. Real estate exchanges, now autonomous of chambers, have their own network and interests—and are augmented by newly forming CBD property owners’ associations

Privately owned industrial parks—many located around railroads, some even in suburbs—are common. Railroads, formerly centerpiece EDOs, have stepped out of the limelight, as have the HEDO utilities. Streetcars have been replaced by buses and subways, and are in the process of themselves being replaced by the automobile and plane. Port authorities were expanding to assume responsibility for planes, trains, buses and subways—and regional planning for good measure. State involvement in ED has generated few formal EDOs outside of tourism, natural resources and agriculture; but a number of departments are extending into ED-relevant activities, and the states themselves are beginning think strategically. Municipal governments now possess the capacity to take the lead in jurisdictional policy, and can make noises to show that implementation of policy is possible. Infrastructure, bonding and incentives are mainstays of their policy initiatives. Former semi-autonomous boards and commissions are now departments more or less controlled by mayors and councils, or managed by city managers. Still, if the mayor in a staff meeting were to require all economic developers to stand up, I’m not sure if anybody would. We’ve come a long way, but we’re not there yet.

In some ways community development seems more robust at this point. Settlement houses, reform movements, even City Beautiful Park Commissions, not to mention hundreds of neighborhood-level organizations populate city and periphery residential areas. During the twenties, community developers will city-build suburbs and startup regional planning commissions whose centerpiece plan focuses on economic growth and coordination as much as transportation and periphery expansion. Some cities are actively pursuing a municipal-level version of community development. Make no mistake, now-traditional mainstream ED is still dominant, but it has been subcontracted mostly to chambers, with government stepping up to infrastructure but not business assistance and concern for the jurisdictional economic base.

This, to me, is onionization and siloization at work (refer to Chapter 1 for definition and description). The 1920s’ ED and EDO landscape reflects onionization as new EDOs spring up to address certain problems and issues, develop tools and programs, stress certain strategies and develop distinctive constituencies, becoming over time embedded in the jurisdictional policy system. Onionization leads to siloization as ED and CD are sliced and diced into little component pieces with specialized careers, skills, expertise and a vertical professional hierarchy to nourish and protect silo members. A third dynamic, constituencies, sustain their autonomy and persistence. The twenties’ ED policy system is visibly more complex structurally and multi-strategy. Little policy “whirlpools”, autonomous policy-making and implementation, can be spotted in each Big City. That has certain implications.

Goal complexity is now real. Not everybody defines the same goal in the same way, with the same indicators—and EDOs serve different constituencies. It’s not just Progressivism and Privatism in operation. ED in the perceptions and minds of its various actors has narrowed and specialized, requiring relevant expertise, experience and a different toolbox to carry forward different strategies. Generally, each EDO operates in its special area; coordination is not yet a serious concern in the early twentieth century—what coordination is attempted is usually by a chamber, which remains the one place a “big picture” is likely to be found.

In the old days it was simple: ED was about growth and avoiding decline. Increase in population and expansion of the jurisdictional economic base were the chief indicators of success or failure. Of the two, population growth carried the greatest impact. That overall concern with growth (economic and population) remains in the twenties, but the various silos that have emerged are not responsible for it—just their little piece of the pie. In the place of simple growth, sub-indicators relevant to the EDO, its mission and constituency, assume prominence. All this, so evident in 2016, can be seen 100 years earlier. The critical issue then, as now, is who (if anyone) is responsible for the bottom-line growth and economic health of a jurisdiction in a modern capitalist economy?

In the remainder of this section, two specific manifestations of onionization and siloization will occur in the twenties: the formation of the American Industrial Development Council and the appearance of states consciously participating in, sometimes leading, sub-state ED.

The American Industrial Development Council (AIDC)

In the midst of all these searching questions, economic development took a giant step forward. Late to the game (port authorities created a professional association in 1912), it established a national, professional association composed of its Privatist-leaning mainstream chamber-focused actors concerned with their prime strategy: attraction.

The US Chamber had much on its plate during the Wilson administration. It was instrumental in the passage of his Progressive agenda, including the Federal Reserve System. During the twenties, the chamber focused on domestic and chamber-related issues; sub-state economic development was a major concern. Prior to the Depression, subsidies and incentives were pervasive and utilized commonly in all regions by municipal governments.¹ Prodded no doubt by goings-on associated with the textile war’s second phase, but also by increasingly much-criticized competition among Big Cities to attract firms with incentives, the chamber perceived a need to provide leadership and expertise to its members on how economic development could be pursued with the fewest negative side effects. Some municipal programs violated gift and loan clauses of their state constitution (Cobb, 1993, p. 5). Southern chambers, in particular, had already become a lightning rod for unfair methods. Southern attraction programs, few in number, were very aggressive during the twenties—Forward Atlanta in 1925 for example (Denn, 1961, pp. 9, 6).

Accordingly in 1926, instigated by its staff, the US Chamber contacted key individuals from the nearby Baltimore Association of Commerce—H. Findlay French and George C. Smith of Baltimore’s Canton Railroad Company—to organize a conference for chamber industrial bureaus and other relevant participants (Denn, 1961, p. 1). The subsequent conference in Baltimore formed a semi-formal “chamber subsidiary”, the American Industrial Development Council (AIDC), in 1926, staffed by F. Stuart Fitzpatrick. The AIDC is the first specifically national economic development professional association (from its inception Canadians were members).² The formation of AIDC—sitting within the US Chamber, the host of state chamber associations and the Association for Chamber Executives—is a vivid testimony to both onionization and siloization at work.

With one exception, until the 1950s conferences and annual meetings were held in Washington and membership was limited to 125 males. This changed in 1957 when AIDC delinked from the US Chamber and became an open, national membership-based professional association. Despite its semi-informal nature, dependent staff and restricted membership, pre-1955 AIDC served as the profession’s chief professional association. For its opening 1926 conference New York sent five delegates; the 14-state South had seven; Iowa, Oklahoma, Missouri, Pennsylvania, Maryland, Illinois, Ohio (three), Indiana and Colorado were also represented. Former railroader George Smith was its first, and long-standing, chair. AIDC conferences encouraged networking and informal discussion and committee-based research reports; and invited speakers of relevance to chamber-style economic development was their usual fare for decades.

Several observations can be drawn from pre-1955 AIDC conferences and activities. First, through rotation of its board/leadership, the intention was to provide coherence to the chamber-based ED initiatives. AIDC set professional standards and confronted issues in ED practice. Despite its informality, AIDC educated and “regulated” its members to act in accordance with ethics and “best practices. It confronted the bonus/incentive issue squarely by developing quality/ethical standards for advertising and promotion, and it valiantly informed debate on how firms made relocation decisions—research remarkably congruent with today’s thinking. ADIC also developed recommendations on how to avoid “piracy.” It regularly surveyed its members. Rogue EDOs did appear, however, and AIDC had no powers to intervene. Importantly, it did not embrace legislative advocacy, lobbying or “developing” the federal “connection”. As AIDC evolves its changes will be considered in future chapters.

The State in Sub-State Economic Development

Up to this point, economic development as a policy area had been driven primarily by local jurisdictions. The state had been mostly reactionary—brought in because of Dillon’s Law, home rule or gift clause bypass legislation. During the twenties, a new actor (states), however, appeared on the economic development scene. In this decade “entrepreneurial states” can be found. In previous decades, states had established divisions and bureaus, especially tourism, “development” and agriculture/natural resource that overlapped into economic development. In the twenties, whatever their name, some states formed state-level “entities” and worked with sub-state jurisdictions in specific ED strategies. Others consciously adopted an attraction strategy that took advantage of the state’s so-called “climate” that favored and attracted certain groups of firms and people.

It is hard to ignore a sad reality that for most of the nineteenth century the states were arguably the most corrupt and incapable level of government in the United States. Most state legislatures and state election districts adjusted poorly to the rise of their urban areas. The lack of “redistricting” meant that rural, often blatantly anti-urban/ immigrant interests prevailed in state legislatures and obstructed urban economic development. The late nineteenth-/early twentieth-century state legislative shutdown of Big City suburban annexation is one example—gift and loan clauses yet another. The situation of western territories/early state governments and southern state governments during, and even after, Reconstruction has also been noted. States could not hope to avoid ED issues, but they preferred to deal with them through sub-state jurisdictions. State-level participation in sub-state ED policy-making has always been confused by Dillon’s Law. The state as sovereign parent of sub-state jurisdictions is intimately involved in authorizing/empowering local structures, electoral and governance systems, bureaucratic activities and functions, programs and policy decision-making. Passage of authorizing/empowerment legislation, however, especially during the nineteenth century, does not support the existence of any coherent, conscious ED strategy or goal.

The principal exceptions are transportation infrastructure and ED tools of tax abatement/eminent domain. When times were tough, however, states jettisoned ED transportation infrastructure back to sub-state jurisdictions through gift and loan clauses. States were active in tax abatement since 1790—and eminent domain for state purposes had always been used as well. States actively provided services to agriculture a century previous. Pre-1920 economic development programs were often located in state Departments of Agriculture or, in western states, Departments of Mining or Natural Resources. Usually, such programs focused on attraction or promotion and were residues of earlier homesteading and early city-building. The reality is that these early state EDOs were embryonic, sometimes single-industry dominated and creatures of interest groups such as the railroads and mining companies. Frequently located in departments of agriculture, but sometimes set apart in an office of its own was tourism. Tourism, also promotional by nature, suggests that many states had developed experience, and probably some capacity previous to 1920.

Until the 1920s no state had established a department-level agency devoted substantially to a “modern urban-municipal” economic development strategy, excepting tourism. There are no semi-reliable surveys until H. McKinley Conway’s in 1966. James Cobb traces the first state-level EDO to Alabama in 1923: Alabama’s Department of Commerce and Industries targeted to agriculture and manufacturing (Cobb, 1993, p. 64). Florida’s 1925 Department of Immigration attracted tourists, new immigrants and business investment. In 1927 Alabama split manufacturing into a separate department, the Industrial Development Board. A few other states (Virginia, South Carolina and North Carolina) also created state EDOs in the 1920s (Eisinger, 1988, p. 16). North Carolina’s Department of Conservation and Development acted “in the nature of a state chamber of commerce”. Virginia’s and South Carolina’s centered on promotion and advertising (Cobb, 1993, p. 64). If Cobb and also Eisinger (1998) are correct, the first “modern” state-level EDOs were from the South.³

The second phase of the New England textile wars (discussed below) led to the 1928 formation of a Massachusetts state-level promotional EDO. Frankly, we would not be surprised to find other northern states with small, nondescript promotional programs in these years. Although slightly past the time period of this present discussion, both Pennsylvania (1939) and New York (1944) created state-level multi-function lead EDOs (Departments of Commerce) previous to the end of World War II. Northern states were not far behind their southern counterparts.

Conway’s study asserts that the professionalism evident in state-EDOs of the sixties was the result of “trial and error” learning over the course of many years:

In their early days state development agencies were, in fact, generally characterized by a lack of efficiency. Personnel were selected on a political basis; functions were planned for political effect; administrative practices were poor; and programs were unprofessional. As a consequence results were poor. (Conway, 1966, p. 29)

He later labels these state-level economic developers as “wine ‘em and dine ‘em pretenders” (p. 30). If Conway is correct, and I believe he is, early state-level programmatic effects were minimal—and focused on state-level attraction of tourists and business.

State Business Climate

So it seems, given the above “history,” that states, to the extent they involved themselves in ED, primarily pursued some form of attraction strategy. Tax abatement for manufacturing firms was probably the first and was fairly commonplace even in colonial times. The first “manufacturer’s tax exemption” my research uncovered was in Massachusetts in 1785 (Seligman, 1895, p. 231). In those days, sector tax abatement was less an attraction than a startup incentive, and, as used in the nineteenth century, probably contained equal parts of startup, retention and attraction. The idea of using state law beyond tax abatement to favor, promote or attract people, firms and revenues in a systematic, sustained and conscious program initiative—what we today describe as “climate”—is another matter.

Business climate is an ED strategy, mostly, but not exclusively, associated with states. Climate refers to the combined impact on businesses and individuals of public policies, laws, judicial rulings, natural endowments and other assets that positively or negatively affect political, economic, mobility, behavior, quality of life, profitability and economic growth of individuals, firms and industry sectors.⁴ Our broad definition allows for people, firm, sector and capital mobility. The opening salvo of a planned state-led climate strategy was probably fired by both Delaware and New Jersey.

Delaware recognized early that several unique features of its original state constitution provided favorable treatment to incorporate businesses (and tax them).⁵ By the end of the nineteenth century Delaware was already a leader in attracting the incorporation of business, especially industrial firms, using its laws,⁶ court system and tax codes to garner revenues and professional jobs for the state. The surprise is that, by the turn of the twentieth century, it was New Jersey that actually led in this attraction of business incorporation. Other states were competing as well (Maine, South Dakota, West Virginia and the Territory of Arizona).⁷ In 1913, however, reforms passed earlier by New Jersey Governor Woodrow Wilson came into effect, taking New Jersey out of the incorporation business. Delaware took the lead in business incorporation after 1913.

Nevada had attempted to compete with Delaware in corporate incorporation, and repealed its inheritance tax to compete in that area as well (the only state in the Union to do so). Consequently, by the mid-1930s Nevada was the most common official residence of millionaires. But its chief state-induced climate initiative was the divorce trade “As of 1928 the state was producing more than twenty-five hundred divorces annually, earning millions of dollars for the state’s lawyers and for the hotels and dude ranches that housed divorce-seekers for the requisite three months” (Teaford, 2002, p. 139). In 1931 the state doubled its annual number of divorces and, also in 1931, Idaho and Arkansas entered into the divorce competition. Nevada responded with new legislation lowering the residence period to six weeks, maintaining its lead. In that same year, however, Nevada upped the ante by approving the nation’s first gambling laws.

The Depression provided the desperation needed for public approval, but the gambling initiative had been on the table during the 1920s. Why gambling? Nevada in 1930 only had 91,000 residents—half that of the next least populated state, Wyoming. Nevada “was largely a desert wasteland” (Teaford, 2002, pp. 139). One advocate, Las Vegas “entrepreneur” Thomas Carroll, ran newspaper advertisements stating that gambling and horse racing would increase tourism and make gambling “the biggest industry in the state.” In November 1930 the Las Vegas Chamber surveyed its membership and uncovered two to one support of legalized gambling. So in 1931 state legislators were persuaded to approve gambling legalization.

Faced with a history of economic failure and the onset of hard times nationwide, Nevada opted to profit from the wages of sin. This was an economic strategy that was already paying off in the 1930s and after 1945 sin would prove a mother lode far more lucrative than the state’s legendary Comstock Lode. (Teaford, 2002, p. 141)

A longstanding and incredibly divisive climate-based controversy—the low tax, nonunion, little regulated Southern business climate—was both consciously designed and the seemingly inevitable consequence of what the South was at certain historical periods. It was both planned and natural. Right to work laws in the 1940s were clearly conscious initiatives with serious ED implications; but turn of the nineteenth century low-wage, non-union, low-tax (because mills were outside city limits) Carolina textile mills, in our opinion, reflected the surplus labor and Redeemer political culture of the era. That climate was not purposely created to attract outside investment—in fact many Redeemers did not want industrialization. Climate can be unplanned, as California business incorporation law that favored Silicon Valley startup technology.

THE OLIGOPOLISTIC PROFIT CYCLE GRINDS ON

By the 1920s the American industrial economy had been operating for over a hundred years: time to check in with the evolution of our profit cycle. While industrial output was increasing during the twenties, the rate of new job creation was falling. Productivity, cost reduction and mass volumes hint that the specter of Markusen’s third stage was hiding in the decade’s shadows. New industries and sectors such as automobiles/trucks, petrochemical and aerospace had emerged; science, R&D, and new and better machines, materials and processes developed; business management improved production; consumers acquired new tastes and lost others; discretionary spending was increasing—the list goes on.

But facilities aged; production required new types of space; and logistics and transportation constantly shifted advantages and disadvantages across metro regions, the nation and the globe for that matter. Some managers were great; others made mistakes. Unions formed, ebbed and flowed (the 1920s were not particularly good years for the union movement); some brands lost touch with the consumer; mergers occurred constantly, and bankruptcies happened. And the structure—the concentration or number of firms in each sector and industry—tended to contract with each decade. Oligarchies, our code word for all of this, became more prevalent. In short, time wounds all heels, and many industry sectors had moved along our profit life cycle, deep into Stage 3 and 4.

Can We Learn How to Manage the Jurisdictional Economic Base?

We have just begun our journey through American ED history. The time period under discussion is the 1920s—nearly a hundred years ago. Our goal in this section is to set a base from which the reader can read future chapters and discern what he or she might take away for their use. This may be best done by selected case studies which raise issues, frame questions and ground expectations as to what can be done to manage the jurisdictional economic base more effectively. History, in case the reader was wondering, does not provide magic bullet answers or simple causal explanations derived from an ideology or conceptual framework. Both derive magic bullet answers because they simplify why things happen—and place the blame or find the single solution for us. Good history does none of these things. So why bother?

Rather than create a theoretical, conceptual or ideological fantasyland, history reveals that problems and crises are chronic—seldom “solved”, and history provides some idea as to when and how those who came before dealt with them. In many cases we can learn why they went wrong: a good deal of the time our future history shows economic developers and the Policy World made assumptions that did not prove valid but which seemed reasonable at the time. Most of the time these assumptions and solutions were simple and easy to follow. In some cases they fought the past wars over again, and lost. In other cases their political culture demanded or precluded solutions which did not work—maybe could not work.

Within each of the three “Parts” of this history, economic developers worked within paradigms or a framework of assumptions, key variables and solutions. These paradigms were affected by the political culture of the jurisdiction and the world they perceived surrounded them. Paradigms simplify and they create herds; herds seem to overwhelm any possibility of a paradigm’s success. Part of the problem is that, looking from the bottom up, this history sees a paradigm as one-explanation/solution-fits-all does not reflect diversity of regions, cities of different size and composition of the jurisdictional economic base. It does not encompass the variety of goals that any community may ask its economic developers to pursue. Paradigms can superimpose goals on a jurisdiction and its residents. Asking questions can check the knee-jerk application of a paradigm to a community simply because it is influential. We will return to these “questions” at the conclusion of the chapter.

A valuable initial lesson from our history, I suggest, is, whether or not the nation’s and the globe’s economic system is capitalist or state owned, the jurisdictional economic base is not under the control of local economic developers. It was created by, responds to and will travel in tandem with outside forces as they evolve through time. Local economic developers are not powerless; but they are not masters of their fate either. Like parenting, local ED is a process; you do your best and hope it works out. That is why the profit life-cycle is so helpful to economic developers: it impresses upon them the reality that the component firms and industry sectors in the economic base are not fixed, and that over time they will change. Agglomerations become oligopolies under the impact of some form of commoditization. Productivity may increase productions and profits, usually at the expense of jobs. Disruptive innovation can exert similar effects. Our friends can be our enemies.

One critical underlying paradigm of Part I is growth. The growth paradigm continues to the present day: slow growth, sustainable growth, equitable growth—growth is still with us! No one talks about decline. A problem ahead in future chapters is that Big City economic developers encounter decline and embrace a paradigm to deal with it. The paradigm’s explanation for decline is suburbia, and the solution is to assert central city hegemony over its hinterland. While fighting that war, few look at the jurisdictional economic base, other than it might be leaving for the suburbs. So the profit life-cycle grinds on through Stage 3 and into Stages 4 and 5. At the same time, the Big City regional hegemony is being silently undermined—new regions come into economic and political power with a different economic base than found in the Big City. And so we will pick up the resulting mess in Part III and a subsequent volume. In Part II economic developers take their eye off the jurisdictional economic base.

In this section three brief descriptions of important profit life cycle changes will be presented: formation and diffusion of the Detroit/Michigan/Great Lakes agglomeration; the maturation of Lehigh Valley coal-mining; and the second phase in the New England/Carolinas’ textile war. Each tale offers lessons to an economic developer—the constant is that the profit life cycle grinds on. ED cannot take for granted the sustained and eternal health and growth of firms in its jurisdictional economic base. No matter the community, no matter which political culture dominates, no matter the sector, time is not our friend. Sooner or later someone else makes decisions which affect the jurisdiction. Nothing is forever young.

Diffusion of the Auto Agglomeration

In the early decades of the twentieth century came the gazelle of all gazelles— reconstructed economic bases of Detroit, Michigan, Ohio and the Great Lakes states. That gazelle uprooted America’s existing transportation system and revolutionized logistics, eventually creating the “Asphalt Nation” (Kay, 1998). This section does not attempt anything like an auto industry history, or a penetrating assessment of its internal dynamics; it simply describes the auto industry’s geographic diffusion in the twenties through the Depression. I limit the auto industry to two sectors: assembly and auto parts-making.

Growing out of the late nineteenth-century horse and carriage industry, firms in nearly every major Northeast and Midwest state with home-bred innovators “motorized” the buggy. By 1893, autos using various power sources were in production across the Great Lake states. About 1899 the sector entered Stage 2: a period of “tremendous innovation … as the number of parts and assembly plants reached more than 2,800, the number of manufacturers of complete cars reached 181, and employment grew to 400,000” (Markusen, 1985, pp. 163–75). The Stage 2 auto industry exhibited a great deal of regional specialization in technologies: steam in Massachusetts, electricity in Connecticut and gasoline in Detroit (Markusen, 1985, p. 168). By 1903, however, the gasoline engine proved superior, and Detroit became home to the gasoline-powered auto.

Detroit’s gasoline engine evolved from gasoline-powered, combustion-marine engines for lake-going freighters. The area also housed carriage and bicycle firms that converted into auto parts suppliers. Detroit’s wonderful multi-modal location was also a low-wage, non-union town with ample workforce. So by 1903, 73 percent of all autos were made in Michigan. Ford’s revolutionary innovation was not the gasoline engine but the assembly line, which he introduced in 1903. An updated, state-of-the-art “moving” assembly line was inaugurated at Highland Park Michigan in 1914.

Using interchangeable parts, highly differentiated work tasks, and standardized design with no retooling for eleven years, Ford was able to cut the price of his car from $950 in 1909 to $295 in 1922. By 1922 Ford as a company was producing 2 million cars and controlled 55 percent of the market. (Markusen, 1985, p. 164) Concentration (oligopoly) developed within 20 years.

Henry Ford’s business model depended upon flexible, adaptive parts and machine tool manufacturers. They produced the standardized components that were assembled into a complete car; they also fabricated the machine tools needed for assembly. Close proximity to these firms was required. Within a decade labor productivity increased tenfold, and crushing price competition meant the sector had clearly moved through Stage 2 and passed into Stage 3. Stage 3 meant firms outside Detroit either had to embrace the innovation or close up shop: “Smaller firms failed in droves. Two-thirds of the firms competing at the 1919 peak disappeared by 1933 … Job growth became less dramatic as mechanization continually increased productivity” (Markusen, 1985, p. 164).

Ford distrusted what he could not personally oversee, so the Ford Corporation became vertically integrated, buying up parts companies, even raw material firms, and relocating them in the Detroit area (Klier and Rubenstein, 2010). Increasing in size/scale, relying on mass marketing and coordinated planning necessary if parts and materials arrived as needed, meant that logistics, headquarters and administrative/ advertising functions were also located in Detroit and the Great Lakes area. “Auto stimulated the output of steel, glass, pain, upholstery fabrics, and rubber … and oil (gasoline refineries) encouraged secondary agglomerations—and industry concentration.” By 1930 three corporations controlled 90 percent of the finished auto production; by 1941 only 12 companies produced cars at all (Markusen, 1985, pp. 163–6).

Hundreds of firms, scattered from Boston to Chicago, had been acquired, and many relocated or closed down. There were holes in jurisdictional economic bases throughout the North. Detroit had shot its home-brewed gazelle. Innovation and disruption were two-way streets. Oligopoly, however, operated on a one-way street. The renaissance of Detroit recalibrated the Big City and North/Midwest urban hierarchy. Chambers in affected communities were left to deal with these “adjustments”. At the same time, these are the jobs that fueled the Southern Diaspora/Great Migration. These are the jobs that absorbed the excess southern subsistence-level labor force and broke the Redeemer southern agricultural/political system. The effects of oligopoly make visible the vulnerability of the jurisdictional economic base, a phenomenon later called “uneven economic development.” The effects of oligopoly on regional economic development were profound—the South would literally not be the same again. But the auto oligopoly is not finished with jurisdictional and regional impacts.

Things changed in the 1930s. Henry Ford hated unions. He battled, often violently, with Walter Reuther and his United Automobile Workers union (UAW). In 1941 Ford finally signed a collective agreement with the UAW, the last car company to do so. Detroit and the auto industry unionized during the 1930s, and that brutal struggle prompted the auto industry management to leave town. Assembly plants were the first to go; it was cheaper to ship parts and components than an assembled vehicle. If a market area supported sales of 100,000 cars, it justified construction of a regional assembly plant: “They also sought cheaper, more tractable labor in far-flung locations”. Parts manufacturers followed assembly plants. By 1947 assembly plants had been built in Los Angeles by GM, Ford and Chrysler; Atlanta (GM, Ford); Louisville, San Jose and New Jersey (Ford); and Wilmington and Framingham (MA). Accordingly, Michigan’s share of auto employment dropped to 57 percent in 1947: “The impetus to disperse came from three factors: the push of government policy (dispersion of production facilities for military safety during World War II), the push of an organized labor force, and the pull of new markets (Markusen, 1985, pp. 169–70). What oligopoly taketh, it also giveth away.

Pennsylvania Anthracite Coal

Northeastern Pennsylvania’s eight-county anthracite coal region provides us with an interesting counter to our unfortunate fascination with Big Cities, and a companion to the New England/Carolina textile industry. The Lehigh Valley had plenty of coal, a chief source of energy, and that attracted a sizeable number of immigrants. Lehigh coal fueled the blast furnaces of Bethlehem Steel and other firms throughout the Northeast and the Great Lakes. The Lehigh story began in the 1880 when the valley’s three principal cities—Scranton (45,850), Hazleton (6935)⁸ and Wilkes-Barre in Pennsylvania (23,339)—were established, along with numerous “patch” towns that formed around individual mines. Population peak for all three cities was reached in 1930: (Scranton, 143,433), Hazleton (36,765) and Wilkes-Barre (86,626)—declining ever since. The highest growth period was 1880–90, but each city experienced a second growth spurt (for example in 1870–80 for Scranton and 1900–1910 for Hazleton). The high point in anthracite coal employment was 1917 (175,000); in 2000 coal mining employed fewer than 1000. These were the golden years of the anthracite coal mining region.

Local boards of trade were founded in the 1880s. Their strategy, given the cyclical nature of coal mining, was to diversify the economic base. Economic downturns depressed mining production and were lean times indeed for these communities. Specifically, boards of trade sought to bring in firms which could employ women and children of mining families. While it probably fails to warm the reader’s heart, that was the goal. Attraction targets were silk and garment firms, and the primary inducement was tax abatement. In Scranton, for instance, “Commercial lenders in that decade (1880’s) formed a board of trade, which lobbied city officials to offer ten-year tax abatements to new companies that opened operations in the city” (Dublin and Licht, 2005, p. 114).

Later, in 1913–14, the Scranton Board of Trade organized fundraising drives to seed a $1 million loan for its newly established subsidiary, the Scranton Industrial Development Company. This is the earlier discussed “Scranton Plan”, a sophisticated private-funded guarantee that was widely copied. In October 1929 the chamber set up a second fund, the Credit Guarantee Fund, to support its economic development program; and in 1939 the chamber started programs to attract and retain youth (Dublin and Licht, 2005, pp. 114–15). Hazleton, less than 50 miles south of Scranton, pretty much mirrored Scranton’s economic development saga. Recruitment by its chamber equivalent started in the 1880s, intending to diversify into the silk and shirt sectors. Firms captured by their efforts were located in an industrial, park-like “factory hill”. By the mid-1920s, 5000 (mostly female) workers were employed in the silk and shirt sectors—about 20 percent of coal-mining employment. Incentive packages included: guaranteeing a $50,000 mortgage; purchasing part of a downsizing Duplan Silk plant (1935); and offering low-rent space for other industrial tenants (Dublin and Licht, 2005, p. 116). Hazleton’s most aggressive years in economic development still lay in the future, during and immediately after World War II.

Wilkes-Barre’s Board of Trade (1880s) established programs to attract silk and lace manufacturing, but its crowning success was the 1905 relocation of the Matheson Motor Company from Holyoke Massachusetts. Matheson employed nearly 500 workers. In 1929 the chamber expanded its traditional attraction program by setting up two ED committees: an Established Industries Committee (retention), and a New Industries Committee. The Established Industries’ core program was a “buy local” initiative, and the New Industries Committee attracted firms identified from a plan prepared by its New York City-based consultant, the engineering firm Lockwood, Greene & Company (which conducted a comprehensive economic survey of the area). During the Depression decade, the chamber fundraised and established an Industrial Development Fund “that channeled the chamber’s efforts through the outbreak of World War II (Dublin and Licht, 2005, p. 117).

The most obvious observation is that these second/third-tier cities developed serious and relatively sophisticated ED programs long before the turn of the century. These boards/chambers sustained successful programs for a half-century. Planning and a consultant industry were in place previous to the Depression, and current tools and strategies (targeting, loan funds, guarantee programs, industrial parks and tax abatement) were common. As far as strategy goes, the shared focus on the need to diversify and not rely on an agglomeration was evident to these local folk in the 1880s. Their almost instinctual use of attraction supports our belief that attraction draws from “primeval” urges triggered by an unstable urban hierarchy.

But there is dark side as well. Recruitment of targeted firms did occur; at least for Hazleton it provided a measure of economic diversity. Having learned from our previous automobile discussion, the auto sector was in consolidation mode around 1905, and the Matheson Corporation moved from Grand Rapids to Holyoke Massachusetts in 1903 (acquiring assets of the defunct Holyoke Automobile Company). Its move to Wilkes-Barre in 1905 and Matheson’s subsequent failure in 1912 suggest problems. In 1919 the Owen Magnetic Automobile Company occupied the facility, and in 1920 it sold 750 cars (including one to Enrico Caruso, the famous opera tenor); but in 1921 it too went belly up. This turbulence suggests that Stage 4/5 “free-floating firms” were frequent beneficiaries of attraction programs. By the way: the Matheson facility still exists at the time of writing; best knowledge is that it remains vacant.

Broken Cluster: Second Phase of Textile Industry Decline

And now the second episode in our textile sector soap opera. When an agglomeration starts unraveling, economic developers are pulled in. That is a theme of this episode of the soap opera.

Until 1919 New England cotton textile manufacturers responded tactically, but mostly ignored the first phase decline. State government and local chambers had come under short but intense pressure, and then moved on: these [early] fears dissipated after 1900, and … the interregional competitive atmosphere changed … . Northern investment in southern mills ceased completely. When in 1912 Melvin Copeland completed his authoritative study of the industry, he wrote “No new southern branches have been established for several years, and one hears no suggestion that any are contemplated.” (Wright, 1986, p. 135)

So after the 1890–1900 scare New England textile manufacturers had, during a period of high demand and prosperity, either ignored or put up with competition from southern mills. New England textile-related employment stabilized, to a large degree because of a narrowing of southern wage differentials due to supply constraints in southern labor markets, and worldwide increase in demand for cotton-related products did the rest. Uniforms for World War I armies were the frosting on the cake. “It was all Good!” And then it wasn’t.

Almost immediately at war’s end, the bottom fell out of New England’s textile industry. Demand collapsed as new synthetic fibers (innovation) became popular and low-wage international competition hit profits hard. Restrictions on immigration after 1920 cut off cheap labor on which New England industry depended (French Canadians). Wright blames the collapse of America’s “tariff wall” that had sheltered both the South and New England. But lower-cost southern mills were better able to withstand lean times (Wright, 1986, pp. 147–8). Unwillingness of New England cotton textile manufacturers to invest in New England facilities matched by the willingness of New England textile machine tool firms to invest in southern textile firms intensified post-World War I New England textile sector disruption. New England cotton textile manufacturers, on the other hand, blamed unions for inflating costs. They lobbied state governments for relief from unemployment taxes, perceived rightfully as a serious barrier to productivity improvements. Unions cited benefits from higher-wage, highskilled union workers—advancing arguments congruent with today’s “advanced manufacturing” dialogue. The unions were more successful.

While the nation as a whole increased manufacturing employment (+2.2 percent, 1923–29), New England manufacturing employment dropped from 1.25 million to 1.1 million (-12 percent). In Massachusetts textile employment fell by 17 percent.⁹ “Nearly two-fifths of factory jobs in cotton disappeared during the twenties as plant closures spread through the commonwealth’s mill cities. Massachusetts also saw substantial employment losses during this era in woolen and worsted textiles, textile machinery and boots and shoes” (Koistinen, 2005, p. 3). “By 1930 the South exceeded the North in both numbers of plants and employment … By 1935 North Carolina and South Carolina each had capacity exceeding the leading New England state, Massachusetts” (Markusen, 1985, p. 134).

Capacity dropped in absolute terms for the first time. Some mills simply terminated operations or declared bankruptcy. Others relocated to the South. A niche for high quality production remained, however, allowing the most adept producers to continue in the region … but New England’s textile manufacturers operating with old, often obsolete equipment were … vulnerable [when product demand collapsed]. (Rosenbloom, 1998, p. 14)

Southern ED becomes the problem

As the twenties wore on, New England proceeded through its “hard landing”. The complex realities became lost and attempts to reform unemployment tax failed; and the media, unions, textile firms and the business community became polarized and the dialogue changed. Blame shifted to the South’s oppressive labor conditions, cheap labor and tax subsidies from southern governments. The fact that nearly a million spindles moved during the twenties from New England to southern mills only cemented in the minds of many New Englanders that the problem was New England mills fleeing to South—runaway plants. Further proof was that northern capital investment in southern mills restarted.

Koistinen (2002), however, succinctly asserts that New England textile manufacturers did not “flee” New England for southern climes, but were driven out of business—into bankruptcy—by the lower-cost competitors of the Carolinas and the South. During these years, Southerners (not Northerners) “founded, managed and financed the heavy majority of the textile companies” in the South. To be sure, he continues, some New England companies did move looms and spindles to the South (while maintaining their New England plants). Markusen counters “that a six-month strike in New Bedford in 1928 is believed to have crystallized textile mill owner decisions to leave” (1985, p. 135). Koistinen counters that New England mills were simply non-competitive: they shut down; they did not move away. This is further supported by Wolfbein’s Decline of a Cotton Textile City (Wolfbein, 1954). If so, the twenties were not characterized by runaway plants. But such is hindsight.

“Southern” ED was credited with luring firm after firm from New England to the Carolinas with state- and chamber-led promotions/advertising coupled with tax abatements. Unlike the 1900 period, however, it is true they did. The argument, however, that the Carolinas were a low-tax business climate was correct but overstated. The Carolinas at that time were two of only eight states in the nation that had a corporate income tax. Any favorable municipal property tax advantage was substantially mitigated by the state income tax. The Carolinas’ chief underlying strength was always the availability of low-wage labor—not a favorable tax climate. A 1949 survey of 88 new plants that had moved to the South (not just the Carolinas) during this period concluded that the firms “were usually not impressed by local concessions” and were more responsive to an “abundance of raw materials, untapped consumer market demand, and [surprise], the availability of a large, cheap and docile labor force” (McLaughlin and Robock, 1949, p. 112).

Part of the reason the business attraction–recruitment–tax abatement program (Lepawsky, 1949, pp. 57–70) dominated New England media headlines was that southern politicians and economic developers publicly and loudly “claimed credit” for their employment growth and northern investment. Southern economic developers, in their conceit or naivety, sincerely believed they were responsible for firms relocating to the Carolinas—and let everybody and their brother know how good they were. Their logic seemed reasonable: promotion programs and employment growth overlapped, and there were anecdotes galore. Gloating and bragging in the media magnified the perceived effectiveness of southern business attraction–recruitment–tax abatement efforts. Given the rather low opinion of the South held by northern media and opinion leaders, the idea that the latter were eating New England’s lunch rubbed salt into textile-induced wounds. By decade’s end, New England’s textile deindustrialization had become the New England Textile War.

Reaction of New England’s ED

Perhaps a more interesting tale was how New England responded to perceived southern economic development imperialism. Obviously, New England chamber industrial bureaus proved unable to stem the outflow of spindles and looms from New England plants—or do anything meaningful for textile firms that either went bankrupt or were closed by their owners. In 1921 the Boston Chamber of Commerce, Bureau of Commercial and Industrial Affairs published a booklet, The Industrial Supremacy of New England, which defended New England, its industries and business climate from perceived attacks by outsiders. It was more a “rally around the flag, everything is still ok” message: “Massachusetts has actually kept pace for a century industrially and in population … and Boston, its metropolis, has outdistanced safely some of its old-time rivals such as Baltimore.”¹⁰

In 1922 a manufacturers association, the Associated Industries of Massachusetts (AIM), began a decade-long campaign to counter claims that Massachusetts was in decline by generating favorable statistics and publicity. Through a series of reports and press releases throughout the 1920s AIM kept up a constant effort to present the Massachusetts economy in a most favorable light. When the New England economy reeled with its first series of plant closings, business leaders organized a “New England Week” in the summer of 1924. During this week a plethora of “industrial exhibitions, factory tours, public meetings and radio and motion pictures” featured the quality goods produced by the region’s firms and stressed that the region was still in sound economic shape. This effort was mostly focused on Massachusetts’s domestic audience, and should be considered as a business retention initiative.

The results of the business week were pleasing to the organizers, and they formed a permanent organization to continue these and other initiatives to promote and publicize regional success. Joining with many local chambers of commerce (which led the formal effort), utilities, railroads and business of all sectors in 1925, they set up a six-state regional council. In the following year (1926) the six New England governors (along with their chambers of commerce) gathered in Poland Springs Maine to formally empower the nation’s first public–private, multi-state EDO: the New England Council (NEC), which exists to the present. In the years after its founding, the NEC mounted a multi-faceted campaign.

[T]he organization: a) encouraged local manufacturers to adapt the latest management techniques and use laboratory research to aid in product development; b) sought to increase [private] financing for small regional companies, especially those producing technically innovative goods; c) promoted the area’s recreational attractions; and d) encouraged recovery efforts in localities hit by plant closures … The NEC mounted a wide-ranging and sophisticated public relations drive … use of the most up-to-date management and marketing practices as key instruments for improving the competitiveness of area manufacturers … the Council worked to create the impression that, despite problems in some industries, the region as a whole was prosperous, forward-looking, and a “good place to live, work and play.” … Thus the organization proudly announced that in 1929 it had issued 851 separate items on the economic progress of New England … reprinted in three hundred newspapers and periodicals in thirty-seven states. (Koistinen, 2005, pp. 4 and 10) If this were not sufficient, in 1928 the NEC successfully acquired a board seat on the newly formed American Industrial Development Council (AIDC).

Through the twenties New England sub-state governmental response was to work cooperatively with their local chambers of commerce. The earliest specific governmental response was the 1929 formation of the Massachusetts Industrial Commission, whose purpose was to “encourage the growth of commonwealth industries”. The agency appears not to have been well funded and, to our best understanding, mostly restricted itself to data-gathering and publication of collateral material concerning the state’s manufacturing assets. It was, after all, a Depression-era EDO. Still, Massachusetts had created its first formal state-level governmental EDO, and the textile war was arguably the chief factor.

QUO VADIS COMMUNITY DEVELOPMENT?

Community development by the 1920s housed a goodly number of individuals, reformers and Policy World theoreticians who were concerned with “people” as people, not as individuals important to a political or economic system. In a period when social commentators, reformers and socialists were advocating for the “people’s interest”, community development in the twenties was arguably at its Progressive Era peak. In particular, linked with the rising planning movement (and their new-found comprehensive plan, zoning, building codes), community developers acquired entry into the municipal Big City policy system. Surprisingly, they found allies in businesses and the professions that also share many of their concerns as well as their love of the plan. While new tensions and social problems appeared during the twenties, the debate within community development was intense, and considerable conceptual innovation, particularly at the neighborhood level, left a lasting impact on CD.

If neighborhoods still remained the core unit of CD, the CD umbrella included those who questioned whether the city neighborhood, indeed the industrial city itself, was a location where the working man and the poor should live. Powerful and influential community developers questioned the viability of the industrial city and proposed to make it a place of work, separating the Privatist jurisdictional economic base from the residence of those who worked. Seizing upon variations of our earlier discussed garden city, a wing of community developers argued during the twenties that suburbs were the way to go. The newly emerging regional planning movement was the vehicle chosen to advance that position—later the federal government would be approached for support. That city/suburb dichotomy affected the “housing reform wing” most particularly: where should worker and immigrant housing be built, what should it look like and who should own it? Housers identified a low-income crisis that the Depression would make a first order priority, and the appearance of decentralization presented the opportunity to use housing and neighborhoods as a CD/ED strategy to maintain Big City viability, if not hegemony, over its hinterland—but we will leave that to Part II.

All these “wings” and approaches and separate groups of community developers demonstrates that, despite its strength in the twenties, CD was fragmented, unified tenuously by its common concern with people—the disadvantaged, low income and working class in particular. In the twenties, the plan, the entry path into policy-making, also tended to be a unifying factor. Otherwise, it was clear during then that CD included several policy groupings, wings we call them, that (despite some overlap in membership) steered community development onto different, sometimes conflicting, paths. Combined with effects of the Great Migration and the future Depression, this did not augur well for an integrated approach to CD. That again will be picked up in Part II.

In this section, our discussion will distinguish between those community developers that focused on neighborhoods and those that were primarily interested in suburbs as the strategy to help and house the working and lower classes.

Neighborhoods and the Chicago School

After initial post-war hyper-immigration (1.2 million in 1920–21), the immigration spigot was mostly turned off mid-decade. The first immigration adjustment in 1921 imposed a national quota system which drastically reduced immigration, the so-called “open door” replaced with a screen door. In 1924 the appropriately titled Immigration Restriction Act reduced immigration to about 300,000 per year for the remainder of the decade. As one door closes, however, another frequently opens. The Southern Diaspora brought an added dimension to Big City post-World War I population growth—racial change.

The Southern Diaspora/Great Migration picked up steam after World War I as an estimated 6 million rural southern migrants moved to cities during the twenties (McKelvey, 1968, pp. 37–9). This decade’s Southern Diaspora did not affect Big Cities uniformly: migrants followed rail line routes, and northern cities not directly connected to salient rail lines attracted fewer southerners (Buffalo, for example). Mostly, industrial cities with expanding employment opportunities (auto) gathered in large numbers; Chicago, Detroit, Pittsburgh and New York City attracted the most: “Northern cities absorbed during the twenties over 600,000 Negro migrants from the South … By 1930, the nonwhite population of Harlem had reached 164,566, making it the largest community of Negroes in the land” (McKelvey, 1968, p. 39).

Beat-up housing and dilapidated inner-city neighborhoods again welcomed new populations. In 1920 inner-city housing exhibited noticeable deterioration; such housing—overwhelmingly rental, poorly designed, milked by profit-seeking owners— had simply borne the brunt of overuse and overconsumption. Existing residents moved out to move up without any encouragement from new populations. Neighborhood population movements, suburban or otherwise, escalated as good times meant more households could afford better housing. The movements attracted the interest of the Policy World, notably academics from the Chicago School of Sociology (established 1892), which in the second decade of the twentieth century was the nation’s leader in sociology and urban geography.

Robert E. Park personified the Chicago School of Sociology.¹¹ A student of Georg Simmel and John Dewey, a compatriot of William James, a former Harvard professor and journalist, Park had completed a seven-year stint with Booker T. Washington at Tuskegee Institute. Park joined with scholars such as Ernest Burgess (his office mate), Homer Hoyt and Louis Wirth. Their classic The City (1925) revolutionized the neighborhood CD movement. The first Chicago School conceptualized the city as an ecosystem (urban ecological approach) that was characterized by a Darwinian-like competition between social groups over physical space.

This competition for space produced distinctive geographies, neighborhoods, populated by individuals associated with particular social groups (usually ethnic and racial). Class and income differences also fueled neighborhood competition, resulting in a hierarchy of neighborhoods. The hierarchy was characterized by differentials in rental and housing prices. Older, usually cheaper, housing constituted the low end of the housing–neighborhood hierarchy; poorer groups “filtered” into the oldest housing and the wealthy into the newest. Neighborhoods sorted themselves out by class and income.

The city’s neighborhoods “evolved” a pattern of neighborhood succession over time and distance: the furthest out, the periphery, would be the youngest, most expensive housing and the home of the affluent. The most central neighborhoods, the home of the poorest, were the most distressed. Neighborhood succession argued for new housing: destruction of older housing and/or the introduction of additional social, ethnic and racial groups triggered population flows (invasion) from one neighborhood to the next, accelerating deterioration of the poorest into slums.

Chicago housing and neighborhood succession seemed to fit the first or “ethnic” ghetto fairly well. From this perspective movement to the periphery was “good”—it represented economic and social success, and that ethnic immigrants were being “assimilated” into society and the economy. At the time, to the extent it was thought about, African-Americans it was assumed would assimilate in their turn as other immigrants had. That, of course, proved to be faulty thinking; accordingly, in a future chapter we will revisit that issue and discuss “the second ghetto”.

Up to and during the twenties, however, African-Americans were submerged in a sea of ethnic neighborhoods. Except for color:

the first wave of black migration moved as family units, or maintained family ties, and placed heavy emphasis on education as the best means for advancement … By the end of the 1920s, major cities were split between a white and black metropolis divided by a few streets and invisible but real color lines. (Abbott, 1987, pp. 29–30)

The second ghetto was in the process of forming, but its evolution was noticed only by those directly affected by it. During the twenties some settlement houses and recreation centers, for example, segregated their programs—or would not admit blacks at all (Abbott, 1987, p. 31).

Starting in the twenties, and picking up considerable steam in the Depression, ghetto housing rehabilitation became the prime strategy of community development. Social reformers/settlement workers either joined with housing planners or gravitated toward public housing and slum clearance. A few, Mary Simkhovitch for example, remained committed to settlement house style. Daniel Carpenter of the Hudson Guild Neighborhood House in New York City also stuck to early concepts well into the 1950s. The shift away from settlement and “old-style” neighborhood community development is demonstrated in the evolution of Clarence Perry, commonly regarded as the “founder” of the modern neighborhood movement.

Planned Neighborhoods: Clarence Arthur Perry

Initially involved with the 1909 Forest Hills Gardens project, Perry, an employee of Russell Sage, gravitated to the playground–community center–recreation movement. This movement, active through World War I, formed the Community Center Association and attached itself to the Chicago School of Sociology and the American Sociological Society The movement urged public schools to use their playgrounds for general neighborhood residents’ use. Perry moved into the construction of community centers that served a variety of residents’ needs, including neighborhood meetings, adult education and recreation. “Every school house [was to be] a community capital, and every community a little democracy” was its public goal (Gillette Jr., 1983). Perry’s 1910 book, Wider Use of the School Plan, became the movement’s bible, and it was supplemented by pamphlets and monographs. Perry described the community center movement as “an extension of the settlement movement” and perceived neighborhoods and neighborhood facilities as linking individuals/residents to the larger community, improving in the process their overall well-being and creating a more effective democracy (Gillette Jr., 1983, p. 423).

Perry was a planner; he arrived on the scene just as cars made their first appearance. His first concern was that children could not travel to playgrounds safely because of traffic. So he developed ideas on how to design neighborhoods to counter isolation imposed on neighborhoods by wider streets and increased traffic. Using planning designs and concepts, “The Neighborhood Unit: a Scheme for the Arrangement of Family Life Community” was included in the 1929 Regional Plan of New York. His approach became linked in the eyes of many to the Chicago School and neighborhood succession.

Perry’s ideas were compatible with the era’s “physical planning affects behavior paradigm”. The notion that “physical changes in the urban fabric … could improve social life and enhance citizenship” were first found in Charles Horton Cooley’s Social Organization (1909). Cooley argued that the family, play group and neighborhood or community group of elders were the three most important factors in the socialization process: he saw neighborhoods as a nursery for “primary ideals” such as loyalty, truth, service and kindness. Neighborhoods, if planned correctly, could recreate the small town and the virtues associated with small-town living within the Big City:

with its physical demarcation, its planned recreational facilities, its accessible shopping centers, and its convenient circulatory system … would furnish the kind of environment where vigorous health, a rich social life, civic efficiency, and a progressive community consciousness would spontaneously develop and permanently flourish. (Gillette Jr., 1983, pp. 425, 427)

Perry’s image of a neighborhood included neighborhood identity; he defined its ideal size (5000–9000 residents) and fixed the location of services, residences and traffic patterns. For all practical purposes he originated the term “neighborhood unit.” The school was in the center and wide, high-traffic streets with shopping and commercial at its periphery. Residential streets, often curvilinear, flowed away from the major arteries; 10 percent of the neighborhood was dedicated to parks and playgrounds. He advocated forming homeowners’ associations. Seized upon by Clarence Stein, Perry’s ideas were later incorporated into Radburn New Jersey and suburban subdivisions.

Perry fell into disfavor after World War II. At that time social reform advocates such as Jesse Steiner (president of the National Community Center Association) abandoned the neighborhood concept as “obsolete.” Revisionists argued that neighborhoods needed to be homogenous—that Depression-era neighborhoods had become too heterogeneous and too dense to achieve the desired effects. They had become “pseudoneighborhoods.” This issue would later be resolved by accepting neighborhood diversity as replicating America’s diversity—but that reconciliation was 30 years or more in the waiting. Perry eventually returned to favor, embraced by Urban Land in the 1970s and New Urbanism in the 1990s.

Community Development and the Regional Plan of New York

In the course of the twenties a major suburban/central city debate erupted within community development. The debate continued into the 1930s; the issues raised were never resolved, resulting in a more or less permanent schism within CD on whether suburbs were or were not a legitimate alternative to the central city, and the preferred residential location for workers and the middle classes. The crux of the debate, however, focused on the location of manufacturing, the dominant sector of course in Big City jurisdictional economic bases, and the use of zoning to steer manufacturing to the desired location. The debate revolved around the centerpiece of 1920s’ planning, the Regional Plan of New York (RPNY), whose chief protagonists were Lewis Mumford and Russell Sage’s Thomas Adams.

The RPNY debate exposed an important division within CD and the significant overlap between comprehensive planning and economic development; but its lessons extend beyond that. The debate was the first major instance of Big Cities confronting the increasingly obvious decentralization/suburban issue and its implications for the regional metropolitan landscape. The critical role and relationship of Big Cities (central cities) to their suburbs in the shared metropolitan area will arguably be the most controversial, long-lasting and divisive discussion not only in our ED history but also in regional planning, urban governance, politics and economics for the entire twentieth century.

Suburbs are arguably the most important twentieth-century physical transformation in metropolitan America. The RPNY debate was likely the first major instance in which issues were discussed, relationships posited, strategies devised—and actions taken—in America’s leading metropolitan area and economy. From this history’s perspective, the debate ultimately rested on who was to be the leading geography in the new metropolitan order so obviously being formed—metropolitan “power”. The Big City into the 1920s was the unquestioned hegemonic leader of its hinterland economically, politically and even socially. Was that hegemony to continue in a hinterland full of autonomous, independent suburbs? When one debates the location of manufacturing, the core sector in an industrial-era jurisdictional economic base, one certainly establishes the economic hegemony of one geography over another—though it is far from evident that the principals in this debate saw the issue in this manner.

The RPNY debate, being the first, did not frame hegemonic questions in ways that address today’s concerns. The RPNY was a plan, and planning concepts were central not power relationships. Instead the debate involved proxies, the use of zoning as an ED tool, the need to eliminate central city “congestion” to allow modernization of manufacturing, and where to create livable working-class residential areas. In the 1920s, however, they were critical factors. In a section above we concluded our jurisdictional economic base discussion with the pessimistic observation that concerns of the economic base were less central to Big City ED strategies and programs than our concern with the “ticking clock” of the industry/sector profit life-cycle. Modernization of industry was the key concern not being addressed. As working- (and lower-) class residential areas (called neighborhoods in Big Cities) were a defining feature of CD, zoning and comprehensive plans were planner hot buttons of the day.

The issues that divided our protagonists were never bridged; and, frankly, it is not clear what would have changed if they were. The placement of manufacturing and its role in central city or suburb, the separation of residence from one (the former in suburbs and latter in central city), involved larger powerful elements and groups who did not play a major role in the RPNY. What the debate did, however, was discuss actual future realities before they hit. The debate on “congestion” presages that between public housers and business “blight” urban renewal advocates two and three decades later. The question as to whether suburbs had a legitimate role to play in the metro area still lingers.

Lewis Mumford and the Suburbs

While twenty-first-century planning celebrates density as liberating, Lewis Mumford had other ideas. Mumford loved cities and regarded urbanity “as man’s greatest work”; but he did not believe the industrial city was the best urban form to house humanity. His thought, a continuation of Geddes’s garden city, attacked the scale, density and human pathologies he believed were fostered by the Big City. Mumford believed that:

The swollen urban conglomerations of his day [were] “far removed from the sources of life [and were] expanding without purpose [transforming] living forms into frozen metal.” The metropolis destroyed the individual’s identity and self-esteem; only by dispersing the inhabitants into regional clusters would people find communion with their surroundings and each other. Mumford believed that the giant city was just a temporary phenomenon, a product of the nineteenth century’s great population explosion and unprecedented industrial expansion … the accumulated disadvantages of the big cities promised to make them “cemeteries of the dead.” (Gelfand, 1975, pp. 131–6)

For Mumford, central city revitalization was not possible—that urban redevelopment (slum and blight removal) would provide only temporary relief and would chiefly serve the interests of “real estate promoters” (Beauregard, 1993, p. 78). He did not advocate abandoning the central city; instead he envisioned it as a central employment center encased by a ring of residential areas. His vision was not very different from Wright’s Broadacre City and, in fact, departed dramatically from Howard’s garden city. Mumford’s general idea was to abandon the central city as a residential center, leaving it to “house” the economic base of the metropolitan area. Mumford and Clarence Stein joined forces in calling the central city the “city of the dead,” advocating instead building “a series of [well-planned] small scale ‘satellite cities’” (Meyers, 1998, p. 293). Between 1923 and 1929, Mumford was instrumental in creating a paradigm that placed the “regional (central) city” within a metropolitan context (Danielson and Doig, 1982).

Prewar American Progressives, like Mumford, advocated against the central city because to them it had become a Privatist paradise. To Mumford:

Cities were being designed by speculators, planners and engineers with little sensitivity to the nature and function of the community as a whole. Traffic and commerce had become the “presiding deities” of the “sacred city”. [The] … continuous, building up, tearing down, and re-building, with their steady process of congestion … were motivated by the need to provide opportunities for new investment and additional profits. (Beauregard, 1993, p. 78)

Mumford’s solution was metropolitan planning that created planned suburbs built around home and community.

Writing in 1925, Mumford viewed the middle class as being driven from the city by Privatists and the effect of their unrestrained profiteering. In an important (but now ignored) article, “The Fourth Migration” (Mumford, 1925), he outlined “the first migration” described in our second and third chapters. The second led to the rise of the factory towns in the early nineteenth century (internal migration). The third migration, occurring in the early twentieth century, transformed the industrial city into a financial center. The fourth migration, an exodus from cities, is suburbanization. The last migration had been made possible by innovation in communication and transportation technologies (telephone, truck and car, for example). The challenge of the fourth migration was whether to allow it to create new “dinosaur cities” as “destructive and inhumane” as the previous migrations (Stein, 1925).

An alliance of convenience between the Regional Planning Association of America (RPAA, founded by Mumford, Clarence Stein and others) and the Russell Sage Foundation (led by Thomas Adams, its director of Plans and Surveys) crystallized. Perry joined this group in 1928. Their agreed-upon agenda/program called for:

a rationally planned and zoned [central] city which segregated residential, commercial, and industrial uses, as well as social classes … would be anchored by a concentrated central business district, connected by expressways to concentric, low-density residential and industrial suburban rings … ordered according to a comprehensive regional plan. (Meyers, 1998, p. 292)

The alliance developed a formal plan for the New York metro region: the ten-volume Regional Plan of New York (RPNY and its Environs) was published in a series from 1929, continuing (at generational intervals) into recent years (Scott, 1969, pp. 221–7). Integral to the RPNY was the development of two suburbs: Radburn and Hackensack New Jersey. The RPNY acknowledged the inevitability of suburbanization, but attempted to structure decentralization to achieve a rational “order” of social and economic relationships between city and suburb. In these years, the Big City-based planning movement embraced purposes deeply economic development in nature. Segregating uses through zoning, industry and manufacturing, for example, meant determining the location of a Big City economic base. The RPNY’s seeming consensus rested upon poorly defined concepts and conflicting purposes. Within it two visions (Mumford’s and Adams’s) of the new metropolitan order competed. The debate that ensued may well have been one of the most important debates on the future of economic development in the twentieth century. The differences were so serious that they couldn’t be bridged, and the two organizations parted ways in 1933. The heritage of this debate, and the failure to devise a bridge across its differences, left open the path to slum clearance, urban renewal and unrestrained postwar suburbanization.

Fracturing of Progressive Economic/Community Development

The issue that fractured this powerful duopoly was whether the central city remained hegemon in the metropolitan order. As explained earlier, Mumford rejected the Privatist central city—as a residence for workers and the middle class. It was not humane, in large measure because “congestion” rendered a satisfying and empowering human existence impossible. He wanted the new metro system to be built around his version of garden city residential suburbs whose inhabitants went to work in the central city (where the manufacturing economic base was located) via a network of highways and other transportation modes that culminated in the commercial center, the CBD. Adams (Russell Sage), however, “sought to rationalize, reinterpret, and reinforce the cultural and economic hegemony of New York City as a regional and national center”. Adams’s general idea was to sustain the central city as “a regional city” surrounded by an interlocking set of small towns and cities that symbiotically enhanced the assets of the others. Mumford wanted “dismemberment of the metropolitan ‘city of the dead in favor of a web of small scale ‘satellite cities.’” Adams, conversely, wanted to decentralize manufacturing/industry to the suburbs and continue the Big City residential function— i.e. contain suburbanization: suburbs would be mini Big Cities in his image (Meyers, 1998, p. 293).

Adams wanted manufacturing in the suburbs so that it could (1) decentralize to allow for modernization, improved logistical access and productivity enhancements; and (2) manufacturing decentralization relieved the Big City of the obligation of being the only location where manufacturing could be located. As some firms left for the suburbs, other firms could seize upon the abandoned land, modernize, install productivity enhancements and upgrade logistical access. Partial decentralization of industry could allow for central city “congestion” to be reduced—allowing for both manufacturing growth and vastly improved Big City residential neighborhoods. Adams and Mumford supported Perry’s neighborhood principles: Adams wanted to reduce Big City congestion enough to permit their application in the Big City. Mumford believed that was impossible; the dinosaur city was already lost to residential uses and instead satellite suburbs (others would later call them “dormitory suburbs’) were the only alternative.

This debate, very much economic development in nature, was obscured by the RPNY’s reliance on zoning as the tool that would segregate land uses and determine where the manufacturing economic base would be located. Less obvious, but even more critical, was the inadequacy of the definition of a key concept, “congestion”, which had become the buzzword of the day but which, in fact, contained two different concepts of what constituted “congested”. One definition was largely social—i.e. people-based— and from it community development would proceed; the other, more orthodox, economic development focused on removing barriers to private firms’ ability to adjust to changes in their profit cycle.¹²

Mumford’s, satellite suburbs used zoning to stop manufacturing and industry from locating in the suburbs; Adams wanted suburban zoning to allow for manufacturing to relocate to the suburbs—today’s mixed uses. The two plans for Radburn and Hackensack reflect that distinction: the former was Mumford’s and the latter Adams’s. Having battled over two competing visions of the modern metropolitan landscape, they never resolved these differences. Ironically, Mumford’s definition of congestion would support future central city public housing slum removal (which he, in fact, opposed); and Adams’s definition eventually was included in “blight”, the basis for future urban renewal.

The RPNY Continues on Separate Paths

The RPAA/Mumford fell back on the residentially zoned “garden city” and designed suburbs to reflect its principles. They formed a financing corporation, the City Housing Corporation, which between 1924 and 1928 constructed two actual suburban garden cities. The first, Sunnyside New York (1924), was located on a 70-acre tract within Queens (still largely undeveloped at this point). Sunnyside was intended to emphasize affordable working-class housing, but design and financing costs worked the other way. When completed it was probably as, or more, expensive than conventional subdivisions. John Nolen, a former City Beautiful planner, constructed a similar garden city suburb, Mariemont, near Cincinnati cleverly called “A New Town Built to Produce Local Happiness”—a motto that never quite caught on, but was intended to house workers away from the depressing environments of factories. It suffered the same fate as Sunnyside and would end up housing the middle class (Abbott, 1987, p. 41).

The more significant 1928 development at Radburn was intended to be a “town for the motor age”, but its timing was terrible. It got caught up with the 1929 stock market collapse and the Depression. The City Housing Corporation went bankrupt; construction terminated, only later being resumed to house conventional middle-class residents. The net result was that Radburn received unwanted credit for pioneering the “dormitory suburb”—i.e. today’s alleged antecedent of sprawl, with its pedestrian-segregated road system and its infamous “townless highway”, an early example of the parkway. Neither Sunnyside nor Radburn was able to achieve Mumford’s humane metropolis for the working class (Glabb and Brown, 1983, pp. 295–6).

Mumford’s problem was that the “dinosaur city” was much beloved, and evidence for the fourth migration was sketchy until the 1940 census. Also, Mumford did not foresee the inevitable counter-response of Big City political and business leadership to “save” their city. Given the embedded power of Big Cities and the weakness of hinterland suburbia in these years, the Big City was practically guaranteed favored treatment during the 1920s: “much was revealed in the 1930s, when in the wake of the Great Depression.” During the 1930s–1960s, New York City was dominated by city planner Robert Moses, who essentially did what he did, as opposed to following principles of any plan. But the city survived it all, or vice versa.

An uneasy alliance of architects, social workers, housing reformers, labor unions and construction companies launched a campaign to persuade the federal government to provide funds for slum clearance and low income housing. Their spokesmen argued that … public authority could provide decent housing at reasonable rents for low income tenants. (Fogelson, 2001, p. 338)

As for Adams, he had achieved his immediate objective with the publishing of the 1929 Plan. His Hackensack suburb was never developed. The zoning plan included in the RPNY was adopted; and in later years, because it reduced the amount of land earmarked for industry (to allow for manufacturing decentralization), Adams has been blamed for NYC’s later job loss and industry migration. The RPNY has been attacked as having facilitated sprawl. In that both positions in their particular way permitted decentralization, they have been frequently construed as anti-urban, i.e. anti-Big City hegemony.

Wrapping Up CD in the Twenties: CD as a Movement

By this point it is apparent to me that CD was an umbrella for movements. Hovering underneath the CD umbrella were suburb advocates, neighborhood-level reforms, housing reformers, socialists and social workers, and even Privatist faith-based and corporate charity do-gooders—some of whom competed for the membership and the affections of a growing union movement. The term “movement” as used in this history implies a certain level of politicization, even partisanship, that influenced how the wings sought to obtain their goals and pursue their initiatives. There was a pronounced tendency to use government, seek alliances with politicians and, for lack of a better word, proselytize or advocate on behalf of a neighborhood, a community or a sub-group—usually a class-based sub-group in these years. Social change of some sort was a visible component of their strategies, if not the ultimate goal. Community development at the municipal level was absolutely political in nature, with socialist parties and social reform mayors.

This dramatically differentiated community developers from traditional or mainstream economic development. ED tended to avoid politics like the plague. Focusing on infrastructure, companies and the jurisdictional economic base, its adherents typically set apart their political tendencies and worked with whoever to accomplish their purposes. Chambers required their anti-machine members to form civic clubs to secure political victory. They formed non-partisan municipal research bureaus to work with whoever occupied power in municipal government. Structural reformers sought nonpartisan elections and city managers to take politics out of policy and policy implementation. Infrastructure referendums were not inherently political, and chambers could work out some accommodations with machines. Purely Privatist ED was highly individualist; and, while not adverse to influencing or even controlling government so as to better accomplish their goals, they typically kept their distance, dealing with intermediaries, HEDOs and political proxies.

SHOULD WE BE CONCERNED ABOUT SUBURBS?

Sociologist R.D. McKenzie in 1933 commented that Big Cities were surrounded by growing suburbs/unincorporated areas; acknowledging new economic, political and social interrelationships between city and hinterland meant changes in function, roles and physical requirements of each—an “entirely new social and economic entity”. Since 1880 the Census Bureau had reported statistics for central cities and “metropolitan districts”; in 1910 the Bureau provided data on 25 metros. The 1920 census reported a majority of Americans living in urban areas; more than two-thirds of that majority lived in 58 metro areas accounting for half the nation’s overall population increase (McKelvey, 1968, p. 31). The Bureau, however, also noted that outlying peripheries grew at a faster rate than the central city itself. It wasn’t until the 1920s, however, that a critical mass combined with a visible periphery exodus caught the attention of planners and elements of the business community—and, of course, our RPNY planners.

But in this decade there was little consensus as to whether that was to be feared or fostered. Continued central city dominance was simply assumed as more or less the natural order of things.

We may think of [the] metropolitan economy as an organization of people having a large city as a nucleus … of producers and consumers mutually dependent for goods and service … concentrated in a large city which is the focus of local trade and the center through which normal economic relations with the outside are established and maintained … A closer examination of these dependent towns [suburbs] would show different types performing different functions, but all subordinate. (Glabb and Brown, 1983, pp. 270–71)

Suburbs, it was thought, could be managed or coordinated using alternatives such as regional planning, centralized infrastructure; and a network of highways leading to the CBD were prospective solutions. Battered neighborhoods and a first-rate housing crisis were perceived as the central city’s chief obstacles to maintaining the status quo. The hope was to limit suburban growth by reducing central city population exodus. Still there was no disputing, the suburbs were gathering momentum.

Growth in the Twenties’ Suburb

No doubt a large part of the answer to suburban growth involved the car. Everyone had one—actually with 8 million registrations in 1920, only one in 13 households had one. By 1925, however, 17.5 million cars were registered and there were 2.5 million trucks on the road (Jackson, 1985, p. 162). In the 1920s the era of the streetcar (and streetcar suburbs) was over. Hated streetcar monopolies, with their all-too-corrupt politics, lost ridership, which led to General Motors and municipal-owned bus systems and the ripping up of lines. Streetcar ridership peaked in 1923: “Several cities made key decisions against major spending on public transit during the 1920s … [For example] Detroit voters in 1929 rejected a $280 million proposal that would have resulted in subways, 65 miles of surface rapid transit, and 560 miles of trolley lines” (Abbott, 1987, p. 43).

Suburbs exploded in the interwar period “simply because millions of people wanted to live in them”. In 1920 a little less than 7 million lived in suburbs—by 1940 nearly 17.5 million (Wilson, 1974, pp. 34, 46–57). Baltimore grew by 9.7 percent (1920–30), its suburbs by 52 percent; Shaker Heights Ohio (a Cleveland suburb) grew by 1000 percent and Elmwood Park Illinois by 717 percent. The link between car registration and explosive suburban growth is undeniable. These are auto suburbs. One need not have been “elite” to buy a car. The era of solely elite suburbs is over. Dolores Hayden describes these years as “mail-order and self-built suburbs”; she includes a section on Sears’s mail order (whose motto was “A Home of Your Own is an Absolute Necessity”), from which she estimates 50,000 houses were constructed (Hayden, 2003, p. 97). The era of American home ownership, an era that last until 2008, had started. Manufacturing also decentralized to the suburbs: “In 1919 eleven central cities in the country’s forty largest manufacturing counties still accounted for 85 percent of the [nation’s] manufacturing workers. By 1937 this percentage had fallen to just under 60” (Glabb and Brown, 1983, p. 275).

Typical was Shaker Heights, pioneered by brothers Otis and Mantis Van Sweringen (I did not make up their names), former clerks and bicycle-shop owners. Purchasing 1400 acres on what had been the site of a Shaker religious community, they meticulously planned a suburb comprised of different subdivisions at varying price levels, ensuring each subdivision included homes with similar priced units on 100-foot lots. Cheaper units would not impinge on their neighbors. They abandoned the city grid and platted curved and semi-elliptical roads off of large boulevards. Natural park areas were retained, and each subdivision was comprised of units with similar housing design and followed strict exterior and landscaping appearance. As always, marketing and promotion was core to the model. From 1919 to 1929 (the Depression) 300 homes were sold each year. Starting with a population of 1500, by decade’s end Shaker Heights was home to 15,000. Unfortunately for the two brothers, they sold their company, invested the profits and went bankrupt in the Depression.

Pre-Depression Initiatives to Deal with Growing Suburbia

Since the 1850s’ state legislatures (Dillon’s Law again) confronted repeated and divisive requests from central cities to annex and prospective suburbs to incorporate. The longstanding truism that state legislatures were disproportionately controlled by rural and non-Big City politicians, while correct, is probably overstated in regard to annexation in the nineteenth century. Big Cities were authorized to annex repeatedly by state legislatures, but “special legislation” or special charters were more a colossal pain the in the butt than an opportunity to poke a stick in the Big City eye. So, early in the Civil War period, state legislatures increasingly abandoned special legislation in favor of voter referendum. By 1910, 27 of 46 states had repealed these special charters in favor of referendums (Teaford, 1979, p. 38)—let the voter decide.

So long as the Big City could provide enhanced services—safe, clean, cheap water being the most central—suburbs were willing to vote for annexation. Yellow fever epidemics in the 1890s convinced many suburbs to join the Big City. Big Cities therefore were very successful in annexation drives, most often led by chambers which sincerely believed “the bigger the city, the better” because stagnant cities risk non-competitiveness with growing cities (Teaford, 1979, p. 88). But, after 1900, this Big City advantage dried up with each year. Several alternative ways for suburbs to acquire the needed services were increasingly available. Between 1900 and 1910 Big Cities were still successful, but this was Big City annexation’s last hurrah.

What made mail order, self-built or builder subdivision suburbanization possible was the development of the service district. The service district, another hybrid structure— set apart from gifts and loan clauses, and outside municipal government budgetary and debt constraints—was “governed” by private/public boards, sometimes elected, sometimes appointed. These infrastructure hybrids were responsible for water, sewers, roads, lighting and all the good stuff that earlier Big Cities had detailed to corporation charters, franchises, regulated utilities and state and/or local independent boards and commissions. The service district, without doubt, put to rest the flux of imperfect public/private HEDOs that had dominated infrastructure since Chapter 3. Service districts took over the heavy lifting associated with installing infrastructure necessary for a large urban center and an industrial economic base—an infrastructure that had been the highest priority and first task of early economic developers. To the astute reader who remembers our conceptual model, onionization takes a great step forward. Service districts made large-scale suburbanization possible.

Possibly the first Big City service district was Boston’s 1895 Metropolitan Water District; in 1905 NYC established its massive Water Authority, and the North New Jersey Water District was formed in 1918.

Suburban service districts were possible in the twenties because tax exempt debt was attractive to bond markets and outside the debt limits of state constitutions. Moreover, by the twenties many of the smaller and poorest suburbs, and the settled unincorporated areas, had consolidated with or annexed to suburbs. A landscape of larger suburban towns and cities resulted—they reached sufficient scale to justify their own service districts. Service districts cemented suburban autonomy, taking annexation off the table and locking Big Cities into a fixed geography.

The year in which Illinois’ legislature enacted the Sanitary District Bill was the last year Chicago would make massive additions to its territory. Boston would annex only one town following the creation of the Metropolitan Water District. … Between 1900 and 1930, the state legislature of Ohio enacted twenty-five measures providing for intergovernmental contractual relations, including statutes that allowed municipalities to construct joint sewage systems and joint water works. (Teaford, 1979, pp. 80–82)

If not service districts, then the so-called “urban county” could also provide services. In 1898 only two states empowered counties to operate libraries; by 1930, 28 state counties were empowered. The first county park (Massachusetts) was authorized in 1895; by 1930 there were 45 states authorizing counties to operate parks. And function after function was added during these years to county governments. Baltimore County, Westchester NY and Los Angeles led the pack.

States like Ohio empowered counties during the twenties to assume what formerly were municipal functions for suburbs and unincorporated areas. Sewage and water districts were subordinated to counties, and the scope of functions performed by counties exploded to include libraries, health and sanitation, parks and recreation, fire and police, and regional planning. County fiscal, budgetary and policy capacity reforms accompanied these new responsibilities: “In urban areas from New York to California, the county was extending its governmental functions and responsibilities more rapidly than the municipality, and the county’s share of local government expenditures was rising.” (Teaford, 1979, pp. 81–2) Aside from infrastructure, urban counties did not become involved with ED-related programs during the twenties.

During 1900–20 the muckrakers were active, and reaction to Big City machine corruption and inefficiency may have been at its highest level. Suburbanites feared the cost of corruption and the inefficiency of service delivery. The issue of ethnic intolerance and racism were also evident, but more like the crime and gangsters associated with Prohibition played a larger role in this period. “Dry” suburbs were an attraction of the rising women’s movement. The success of business structural reforms, the city manager system with non-partisan, at-large elections also popular in these years made an effective alternate form of suburban government possible. Zoning allowed suburbanites to “customize” the suburb to make it more attractive to voters in referendum campaigns. Big City annexation efforts were an increasingly hard sell—by the 1920s a near impossible sell.

In other Big Cities, powerful forces coalesced around their best idea on how to marry city and suburb to effectively compete against rival cities: city/county consolidation. Cincinnati, for example, obsessed with Cleveland’s perceived growth and success, turned to city/county consolidation. The city manager municipal government, the chamber, the Citizens’ League and the League of Women Voters (LWV) lined up in support. In accordance with Dillon’s Law, the battle was fought in the state legislature, where Cincinnati’s Republican political machine rallied state-wide suburban support to defeat the measure. Attempts by Seattle (1923) and St. Louis (1926, 1930), and two attempts in Cleveland also met with failure during the twenties. Out West, things were different. Both Denver and Los Angeles approved partial city/county consolidations (McKelvey, 1968, p. 60).

The most interesting alternative, a real hot-button during the twenties, was the “federation”. The federation borrowed from England’s 1888 County of London model. Within the county were 28 self-governing suburban boroughs responsible for services such as parks, streets, libraries and recreation, while the County Council (CC) handled county-wide services such as sewage, planning and water. Suburbs could keep their identity and self-government, and could customize key services, while city/county consolidation made the county the government of the area—it was a dual-level federation.

Massachusetts debated it in the 1890s, but by the twenties California, Pittsburgh, Cleveland, Milwaukee and St. Louis were hot to trot. Vigorous campaigns were waged and between 1928 and 1934 federation efforts were on the verge of victory in Pittsburgh and Cleveland. State legislatures, however (for various reasons) proved an obstacle, and in the referendums wealthy suburbs supported the federation; but the more numerous working- and middle-class suburbs voted against it—and the promising federation alternative rode off into the policy sunset.

J.C. Nichols: The Mall and the Country Club

The contemporary mythical image of the suburban subdivision had to come from somewhere—our candidate is J.C. Nichols and his Country Club District, developed during the 1920s. Jesse Nichols was an out and out Privatist, but not one that perfectly fits the stereotype. His earlier real estate experiences included building working-class and City Beautiful-like subdivisions. Taking a gamble in 1912, he started development on a new type of subdivision which borrowed heavily from a 1907–08 Baltimore suburb, Roland Park, designed by Olmsted. With no utilities or streetcar, Nichols visualized an upper-class suburb designed for, and dependent on, the automobile. Moreover, he was determined that it would remain a high-class district forever. Property values would never deteriorate, and the quality and beauty of the subdivision would last.

Homes on large lots in park-like settings were only the first step. Statues, fountains and all the “beauty” associated with the old City Beautiful were replicated: broad streets, plenty of parking, lawns in the front. Open space between streets preserved a country-like atmosphere. The key to “forever” was near- perpetual deed restrictions which prescribed, indeed micromanaged, what could be done with the property: types of improvements, colors, gardens—and, of course, racial covenants. To enforce these restrictions and covenants, owners were required to join a “homeowner association” which contracted for the services necessary to maintain the subdivision and enforce its “standards”. Fire and police as well as utilities were also contracted by the association. By 1915, these homeowner associations were converted into Missouri or Kansas non-profits and built into state law. Homeowner associations wasted little time and became a sort of neighborhood government that lobbied city, schools, county and state for services and supportive legislation.

The Country Club District proved successful. In the early twenties, Nichols upped the ante. Believing the future of shopping and consumer commerce did not lie with the congested downtown, he began his design of America’s “first extensively planned and architecturally homogenous shopping center” (Brown and Dorsett, 1978, p. 176) adjacent to his Country Club District—what today is called an outdoor mall. Up to this point “strip” shopping centers, hodge-podge clusters at intersections, without parking, typified commercial developments along the streetcar lines.

Nichols, again relying on the car, departed from the streetcar line and built on-site housing, a quarry, brickyard and a landfill. He spent over $1 million to acquire the land; actual construction started in 1922. The Country Club Plaza shopping center was designed around the automobile, with ample parking a defining feature. Kansas City’s famous City Beautiful planner, George Kessler, was retained as designer and an Olmsted student brought in to assist. Architectural uniformity around a Spanish style was incorporated in each building. The first stores opened in 1923, and soon after branches of downtown department and chain stores opened as well. Nichols believed in owner associations and he set up a Plaza Merchants’ Association to coordinate business activities and programs. In 1923 the association began its first Christmas display—an event that continues to the present. Apartments ringed the Plaza on three sides, creating traffic; by 1929, 5000 lived in the six-block area (Brown and Dorsett, 1978, pp. 176–9).

Both the District and the Plaza were financially successful, and extremely popular. By the end of the Depression, nearly 10 percent of Kansas City’s metro area population lived in the ever-growing Country Club District. It had prospered even during the horrors of the Depression. Nichols’s model was adopted by developers across the nation. And so by the early 1920s the now infamous, insipid, monotonous, tasteless mall had arrived on America’s suburban scene—Babbitt was happy, less so architecture students and planners. Privatists, on the other hand, were overjoyed.

GROWTH

Part I rests upon some form of growth (individual, firm, industry or jurisdictional size). That will be challenged, at least for Big Cities, in Parts II and III. Part I is dominated by city-building, infrastructure installation and formation and maturation of the jurisdictional economic base. Big Cities developed first, and punched their ticking profit cycle clock earlier than the other regions which are predominantly in their initial stages of growth—or, in the South’s case, mired in an unsustainable, low-wage, subsistence, manual, largely non-urban agricultural-export economy. The West and South are out of sequence with the Big Cities. Their story lies ahead. For the moment, however, the hegemonic Big Cities are the leading edge of American economic development. They are growth machines writ large—that, however, is about to change.

Part II is also driven by growth, but a more complex, more nuanced growth. Growth requires, it seems to those of that time, periodic modernization and upgrading. Obsolescence, expressed primarily in housing and transportation infrastructure, is the most serious detriment to further growth. Without growth potential disruption will result. Disruption, however, comes in many forms—that will be quite evident in Part II—and Big Cities faced the threat of disruption and potential decline from an unexpected direction: its hinterland.

Such potential disruption greatly threatened the urban/regional competitive hierarchy. Growth was its core, bottom-line criterion. That works fine when there is no decline. Cities can simply benchmark themselves to other cities to see how well they are doing. When decline becomes a possibility because the Big City risks losing control over its hinterland, however, each city must fight a two-front competition. The competitive hierarchy now includes (1) decline as a possible scenario, and, (2) it becomes clear a second hierarchy, a metropolitan hierarchy, has become critical to the primary of the Big City. This is a turning point in our state and local ED history. Big City success is not just growing in population and/or economic base—it also means harnessing the growth of a hinterland that threatens autonomy.

If the emergence of a second competitive hierarchy were not bad enough, the jurisdictional economic base was getting too big for its britches. The jurisdictional economic base had evolved into a highly-concentrated economic behemoth. Industry concentration affects the structure of business elites, central to the policy systems prevalent in Part I. Concentration meant one percenters no longer concentrated on their Big City alone; they now had national ambitions, and had interests at the Federal level and national markets—they had a northern economic hegemony to run—and keeping the politicians in order diverted their attention.

More local and regional business elites now operated local EDOs; they lacked the firepower of one percenters, increasingly they were torn over how to protect their beloved CBD and make a few bucks from the expanding suburban hinterlands. Unions had arrived on the scene and urban working class had discovered they could factor in the elections of mayors—and working class were less concerned with growth, especially when Prohibition threatened, along with gangster violence. The Gilded Age/Structural Reform municipal policy systems was for the most part, a memory. Economic development was about to be moved into the back seat of municipal policy-making.

Finally, population mobility, up to this point, overwhelmingly net positive for Big Cities, will shift markedly. Immigration was over; the Great Migration was accelerating. By the 1920s, storm clouds are brewing for our Big Cities—the red sky in the morning, a sky that sailors take as warning, is on the horizon of business leaders, Policy Worlders and those who see themselves as economic developers.

The Depression, starting officially in October 1929, hits during the thirties—Part II. In very many ways, the Depression “resets” economic development and, to mix metaphors, shuffles the deck dramatically. Part I is almost entirely focused on the municipal level—American ED until the Depression is municipally driven. There is no doubt who is in charge of the policy area: cities, towns and villages. That will change noticeably during, and after, the Depression. Of course, the federal government will enter the picture in a big way, but little noticed is that FDR’s approach to federalism, “marble cake” it is called, operates through state governments. States during these years will acquire the capacity that municipal governments obtained after the turn of the century. They will become players as well late in Part II and certainly Part III.

NOTES

1. In 1926 a nationwide survey conducted by the AIDC revealed that 102 cities offered incentives.
2. The AIDC was renamed the American Economic Development Council (AEDC) in 1980; the AEDC merged in 2001 with the Council of Urban Economic Development (CUED) to form the International Economic Development Council (IEDC).
3. Cobb appears to have drawn these dates from Albert Lepawsky (1949, p. 8). See also Paul Barnett, An Analysis of State Industrial Programs in the Thirteen Southern States (Knoxville: University of Tennessee Press, 1944).
4. While I changed it substantially, some of the wording was drawn from Joseph L. Bast, Ten Principles for Improved Business Climates, The Heartland Institute, http://www.heartland.org.
5. See Lewis Black Jr., Why Corporations Choose Delaware, http://www.delaware.gov; Alan Trachtenberg, The Incorporation of America: Culture and Society in the Gilded Age (New York: Hill and Wang, 1982); and David McBride, “General Incorporation Laws: History and Economics,” Duke Law Review, vol. 74, no. 1 (2011), http://www.law.duke.edu/journals/lcp.
6. Its original laws were approved, to our knowledge, in 1883. See Katharina Pistor, Yoram Keinan, Jan Kleinheisterkamp and Mark D. West, “The Evolution of Corporate Law: A Cross Country Comparison,” (2001 background report for the World Bank), University of Pennsylvania, Journal of International Economic Law, vol. 23, no. 4 (2003), pp. 791–871.
7. See Robert E. Wright, “How Delaware Became the King of U.S. Corporate Charters,” http://www.bloomberg.com, June 8, 2012, p. 2.
8. Hazleton, meant to be Hazelton, was misspelled at incorporation—and, as we say, the rest was history.
9. S. Bureau of Census, Historical Statistics of the United States, Colonial Times to 1970, Part 2 (Washington DC, 1975), p. 666.
10. Boston Chamber of Commerce, The Industrial Supremacy of New England: A Glimpse of the Present Situation of New England’s Industries (Boston, 1921), pp. 3, 6.

11. Two different schools of Chicago sociology have developed. In this chapter, of course, the first (in its heyday before the 1940s) is my focus. Robert Park, Ernest Burgess and Roderick McKenzie, The City (Chicago: University of Chicago Press, 1925) is the base for our discussion. Edward Banfield and James Q. Wilson’s, City Politics carried that first school perspective into the sixties, extending it to political science. One can argue that this approach shifted with Roger S. Ahlbrandt, Jr. and James V. Cunningham, A New Public Policy for Neighborhood Preservation (New York: Praeger, 1979) and with Anthony Downs, Neighborhoods and Urban Development (Washington: Brookings Institution Press, 1981), who plugs an “arbitrage” model into neighborhood succession.
12. Congestion contained two sets of concerns—one was economic and private-firm based, the other social and working/middle-class centered: “The term had been inherited from the housing reformers and patrician planners of an earlier day, and had become, by the time of its adoption by [the RPAA and RPNY] conflated with the notions of ‘blight’, ‘slums’, ‘overcrowding’, ‘concentration’, ‘mobility’, ‘density’, and ‘traffic jams’. The elasticity of the term permitted a great deal of ostensible concord between [Mumford and Adams] [But] … the economic critique of congestion addressed a perceived crisis in the distribution of goods … grounded in Frederick Winslow Taylor’s principle of scientific management, for more efficient location of industry, for reductions in building density, and for improvement in transportation. The social critique of ‘blight’ and ‘slums’ addressed population density, living conditions, health, and the negative social effects of real estate speculation” (Meyers, 1998, p. 295).