Dry rot to decay: Big City change in the “Wonder Bread” years, 1945–1960
For the first time, Big Cities were no longer growing; several even lost population. Suburbanization prompted unsettling questions about the Big City’s future. From the perspective of many Big City policy-makers, “things” had changed over the last decade or so. Seemingly beset on all sides, Big Cities turned to Washington for help and resources. But Washington, now the leader of the Free World, was divided politically, pulling back from its New Deal/Depression activism. Taking a step back, however, did not mean the feds were returning to “sleep mode.” During the 1950s, the federal government, now under Republican control, restrained its activism and developed programs that reflected its Privatist tendencies—the Small Business Administration (SBA). The page-turning Eisenhower initiative, the 1956 Interstate Commerce Act, as intended, greatly impacted the national urban hierarchy, but also had the unintended (but not unexpected) consequence of digging up Big City neighborhoods—leaving behind a nasty legacy that lingers to this day.
After war’s end, these Big Cities, still very much an economic and political hegemony, confronted floods of suburbanization, accelerating their perceived need for serious slum clearance and CBD revitalization. But something larger was also going on. Big City suburbs now posed a critical mass, were incorporated and were engaged in suburban-building, their equivalent to city-building that developed institutions critical to an operating jurisdictional policy system. As varied as ever, suburbs followed their own policy area priorities, and, if interested in economic development, developed their own distinctive strategies, and even a distinctive approach to ED policy-making. Sadly, too often commentators explain suburbanization from a Big City hegemonic perspective. The evidence that polycentrism is emerging not only in the West but also in Big City hinterlands, therefore, is contested or discounted.
While the “hegemony” never thought of itself as a hegemon, other regions were visibly growing and, especially the South, were not playing “by the usual rules.” More often than ever before northern and midwestern firms were “running away” or being set up in other regions by the federal government. Something had to be done. In the fifties a sort of shadow war with the South erupted over southern “piracy” of New England’s textile manufacturing. The IDB diffusion and selling of the South had seemingly taken its toll on New England’s economic base. At a loss as to how to counter crippling job losses due to plant shutdowns and cut-throat competition from southern mills, New England states struggled to develop an effective response. Economic development became their top priority, but after a decade of trying nothing was working. Taking their complaints about the South and its magic weapon, the IDB, to Congress, New England and northern legislators fought not only the selling of the South but also continued application of federal industrial decentralization, which once again threatened to reward the regional hinterlands at their expense. For the first time the hegemony felt compelled to defend its primacy.
Regional differences and the prospect of future regional change are making themselves felt in ED policy-making and implementation. Amid such diversity and change, growth and decline, this chapter will prepare the reader for the great leap forward in the next chapters. Slums, CBDs and population mobility have captured the attention of Big City planners, politicians, business leaders, the media/Policy World and economic developers; but the time bomb underneath Big City jurisdictional economic bases, like the “Eveready Bunny,” just keeps on ticking. In this chapter, we will continue our metaphor for deindustrialization, the New England textile war, to its conclusion. This chapter discusses change (global, logistic and process innovation) and how it affected not only the economic base but also the structures and practice of our profession/policy area. Onionization, that childishly named concept, reconfigures ED’s structural landscape—revealing in the 1950s what will be a compelling dynamic 50 years in the future.
THE TRUMAN–EISENHOWER YEARS
The Truman Years
Truman inherited a presidency in the war’s final days. Without an instruction manual and governing with a hostile Congress, Truman reconstructed international political and financial systems, helped rebuild Europe and defended South Korea in an Asian land war. Amazingly, Truman also found time for domestic policy. In 1946 Republicans won majorities in both houses of Congress (the first time since 1928); they won a majority of governorships as well. Republicans were determined to roll back the more controversial New Deal programs.
Truman pressed hard for the Employment Act of 1946. As originally submitted to Congress, the Act would have set up a workable “Keynesian” economic system. A strong federal role in the business cycle would have far-reaching implications for sub-state economic developers. Full employment and fiscal tools such as tax cuts and deficit spending implied conscious federal involvement in local economies. These grandiose hopes, however, did not materialize.
The 1946 Employment Act triggered a die-hard fear against national planning. The legislation, while approved, was gutted, merely establishing a Council of Economic Advisors who produced a State of the Economy Report and little else. No commitment to full employment was made, and no stimulative deficit spending approved. The Employment Act, the highlight of Truman’s first years in office, demonstrated the critical role the 1946 congressional elections played in a New Deal Thermidor. Republicans wanted to break the power of unions on federal legislation; and, this must come as a surprise, Republicans voted several rounds of tax cuts and passed meaningful budget cuts—which Truman vetoed. The most critical ED-relevant legislation approved in the 1946 Congress, still around today, was the Taft–Hartley Act.
Taft–Hartley had lasting effects on state/sub-state economic development. The Act overturned the 1935 Wagner Act, permitting states to restrict a “closed shop” requiring compulsory union membership as a condition for a job. Truman vetoed Taft–Hartley; the veto was overturned. Taft–Hartley prompted a burst of state “right to work” laws, setting in motion a regional business climate competition. Other bills modified FDR’s southern economic development strategy. The Hays–Bailey Bill (1945), proposed by southern legislators, committed the federal government to an area-wide jobs to people or place-based approach. That legislation foreshadowed Kennedy’s ARC and Johnson’s creation of the Economic Development Administration (EDA). The bill was not approved, however. Truman, nevertheless, created the Bureau of Employment Security and the Area Development Division, expanding the Federal Employment Act.1
Truman unexpectedly won the 1948 election. His 1949 “Fair Deal” increased minimum wage and social security benefits, but he was unable to increase aid to farmers, pass civil rights legislation, provide aid to education or create a national health program. An important Truman victory, heavily compromised, was the 1949 Housing Act discussed earlier. Approved in 1948, Puerto Rico’s “Operation Bootstrap” resulted in Puerto Rico’s first Industrial Tax Exemption Act—a program similar in its core concept to, believe it or not, BAWI. The Act, designed to attract industrial firms to Puerto Rico, was the first in a string of programs that continues to the present time (Benjamin, 1980, p. 678ff).
The Korean War commenced in June 1950, and industrial decentralization moved to the front-burner.
The Eisenhower Years
Eisenhower’s moderate Republicanism consolidated the New Deal. Mixing budget cuts, tax reductions and a Privatist rationale into Eisenhower-era programs gravitated toward traditional chamber-style ED: infrastructure and assistance to firms. It was, after all, a time characterized by Charles Wilson’s (General Motors’ president/Secretary of Defense) quote: “What was good for our country was good for General Motors, and vice versa.” Eisenhower’s federalism worked through states where possible, following four major principles. Federal assistance should:
- help communities help themselves;
- create permanent jobs (not temporary work programs);
- be implemented by governments close to the troubled community; and
- not be extended “if the proposed project create[s] unemployment in some other area.”2
Congress was also active in sub-state economic development. It conducted hearings and commissions on the IDB, military industrial decentralization and purchasing polices, as well as discussion on how to deal with chronically depressed areas or troubled sectors such as textiles and coal. The Eisenhower years were punctuated by three recessions, and, despite budget cuts, federal deficits increased. The Democrats regained control of Congress in 1954, but the federal government could no longer be described as activist.
Still they were years of considerable change and flux. The Civil Rights Movement began and Brown v. the Topeka Board of Education was issued. The South reacted to both, and Eisenhower cautiously applied the law, essentially on an event-by-event basis—without trying to polarize the South.
Agriculture and Rural Economic Development
After years of studies and bureaucratic resistance (principally from Agriculture Extension Agents), the Department of Agriculture (DOA) submitted rural economic development legislation to Congress in 1955—which was approved. Inspired (prodded would be a better word) by Deputy Undersecretary of Agriculture True D. Morse, the federal government had entered into ED for deeply challenged heartland rural communities/counties. In many rural communities, farmers were no longer able to supplement income by working temporarily in mining and lumber; decline of these industries had reduced farm incomes. Prompted by the Department of Agriculture’s Human Resources: A Report on Problems of Low Income Farmers, the DOA urged federal programs to foster non-farm employment opportunities in targeted rural areas (over 1000 counties). The report outlined 14 initiatives—including lending programs to start farms; encouraging defense industries to develop employment opportunities in rural areas; and educational and vocational training—and stressed need for greater federal involvement in rural loan and technical assistance.
Morse had seized upon the DOA report, appeared before House Agricultural committees, and, in 1955, secured approval of a program (an amendment to the 1914 Smith–Lever Act) authorizing the Extension Service to “give assistance and counseling to local groups in appraising resources for … improvements in agriculture or introduction of industry designed to supplement farm income … and furnishing all possible information as to existing employment opportunities” (Rasmussen, 1989, p. 193; emphasis added). In total 120 new extension agents were hired to implement the program. To minimize congressional opposition to federal involvement in nonagricultural economic development (chair Jamie Whitten was at best a mild supporter), Morse’s Rural Development Program was treated as a “pilot” program, initially available to 57 counties and expanded gradually to 200 counties by 1960 (Roth et al., 2002).
Further research, press and media commentaries followed. In 1958 a conference in Memphis evaluated Morse’s program, considered the impact of tourism in rural areas likely to be opened up by the 1956 Highway Act, and assessed ways to make rural areas more attractive to industries seeking to relocate. Eisenhower himself followed up by establishing a Committee for Rural Development Programs (1959). The National Planning Association issued a report in support, praising Morse and his tireless efforts. In October 1960 at a University of Nebraska conference on Regional Rural Development, Morse’s Rural Development Program was again reviewed. The report that followed indicated the seriousness of the rural crisis and the need for further federal involvement. Surprisingly, in 1961, the new Kennedy administration picked up the report (having read The Other America by Michael Harrington, 1962) and the Rural Development Program was retained and expanded—supplemented by a new federal approach to area-wide rural development.
Morse had pioneered federal rural initiatives that would endure. Now entitled the Rural Intermediary Relending Programs (IRP), they still function today. The program capitalizes revolving loan funds (RLFs) operated by intermediate lending entities. RLFs eligible purposes include: development of business facilities, starting new business, expanding existing business, developing new employment, rural job retention and CD projects in communities of 25,000 or less.
Besides Morse and rural ED, the Eisenhower administration, pulling back from FDR’s more aggressive federal-led marble cake federalism, made several decisions that impacted state and sub-state ED. The National Park Service Mission 66 initiative built necessary infrastructure for significant increase in park tourism after 1966. The Submerged Lands Act of 1953, legislation that stirs the hearts of Americans today, granted states full rights over coastal submerged lands up to the 3-mile US limit. The most obvious effect was oil-drilling responsibilities and proceeds accrued to the states—greatly affecting both California and Alaska in particular. Eisenhower was also more inclined to acknowledge and incorporate local pressures in power development, mineral and logging, and energy uses of federal-owned land. National Park expansion in the late 1940s and 1950s (Jackson Hole and Grand Teton) was tempered by compromise with state and local officials who wanted more opportunities for economic development—opposing the Park Service that was more inclined to seal off areas to preserve and protect natural beauty and the wilderness environment.
Power development on the Snake River was left to the state utilities rather than federal government. One of the more complex decisions (regarding dam construction) on federal land ownership, the Dinosaur National Monument initiative, pitted the Bureau of Reclamation against the Park Service, several states, environmentalists, preservationists and local cattle breeders and industry sectors (Nash, 1999, pp. 66–72). The compromise was controversial, and a later related decision (Glen Canyon) was even more controversial, serving as a warning that in future years federal land, western state rights and appropriate usage of federal lands by locals and industry would be escalated into its own political/economic development movement.
The Small Business Administration
In 1953 a new federal independent agency entered into the lexicon of sub-state economic development: the Small Business Administration (SBA). SBA, while new, did not appear deus ex machina; its origins lay within Hoover’s Depression-era Reconstruction Finance Corporation (RFC), his “bank” for corporations of all sizes during his last year in office. FDR retained the RFC, making it an important instrument of his New Deal–Depression business support system. WWII war production was mostly a big-business affair, and that raised concerns small business would be unable to compete with industry behemoths. So, in 1942, Congress created the Smaller War Plants Corporation (SWPC) to make loans to smaller manufacturers and encourage banks to extend financing to such firms. SWPC advocated for small business in defense contracts as well. Terminated at war’s end, a successor agency, the Small Defense Plants Administration, was recreated upon entry into the Korean War. When finally terminated, the SWPC’s functions (limited management counseling and education) were transferred to the Department of Commerce’s Office of Small Business.
The newly elected Eisenhower and Republican Congress wanted to close the RFC, believing it unnecessary government interference in business-economy (the RFC had been implicated in influence peddling during the Truman administration). Also, the 1949 Hoover Commission on government reorganization urged an end to federal government direct lending because it “invites political and private pressure or even corruption” (Bean, 2001, p. 8). Congressional politics and widespread popular support for small business, however, led Eisenhower to substitute a new small business version of the RFC for the old and discredited one. So in 1953 Congress ended the RFC but created the SBA, which was given a mere four-year authorization. Neither Eisenhower nor Congress envisioned a long-term federal small business financing commitment.
At inception, SBA was authorized to “aid, counsel, assist and protect … the interests of small business concerns” and specifically tasked with including small business in government contracts. By 1954, SBA was already making direct loans and guaranteeing loans to small businesses. SBA further expanded to loans for natural disasters, and picked up counseling and education functions formerly entrusted to the Department of Commerce: “Between 1954 and 1960, SBA financial assistance quadrupled, and agency personnel expanded from 550 employees to 2200 employees” (Bean, 2001, p. 19). SBA services are sometimes referred to as the “three C’s: capital, contracting and counseling.” In 1957 SBA was reapproved as a permanent independent agency. By 1999 it had issued nearly $14 billion from its direct lending program, and in 2010 SBA was granted Cabinet status by President Barack Obama.
Despite its programmatic success, the SBA has always been controversial:
+ Should the federal government be a direct lender to business at all?
+ If yes, should it favor a subset of firms—small business over medium and large firms?
+ What about its vulnerability to political favoritism and outright corruption?
Reflecting these concerns, Main Street business interest groups have not consistently supported the SBA over its history of 60 plus years. The US Chamber of Commerce did not support the SBA’s creation and periodically has advocated its termination. The National Federation of Independent Business (NIFB), while supportive of SBA’s creation, has not been a consistent ally either, and usually is reserved to SBA’s programs. The SBA enjoys fragile support from the small business community, where one still encounters hesitancy to use its programs.
The Republican Party has sometimes called for SBA’s elimination. Eisenhower cut its funding, and the Reagan administration, the 1996 Contract for America and the George W. Bush administration advocated its termination. Democrats, on the other hand, have mostly supported and used the SBA when in office. Yet, SBA survives and prospers—even when Republicans are in charge; banks have increasingly turned to the SBA for financing. This ambivalence suggests something deeper is “going on” than partisanship and business conservative ideology. I suggest small business and SBA straddles the two cultural streams, and has been a perennial “fault line” between Privatism and Progressivism.
Small business taps into the mindset and ideological fabric of many Americans.
Concern for the underdog and the average Joe’s seemingly endless desire to escape meddling bosses by becoming one’s own boss is enduring. The small farmer and now businessman remains the yeoman of American politics. The franchise McDonald’s owner may have been substituted for the yeoman farmer, but that also seems to fall into the fault line. Still, many believe starting a small business is the best way to achieve upward personal, economic and social mobility, and a persistent fear of big business and concentration of industry have from time to time united business Privatists– Progressives. This ad hoc mixture of political cultures and intermittent political and economic congruence has arguably created a residue of support and, at times, patience for small business into which the SBA has tapped.
Expansion of SBA functions/programs was not long in coming. In 1958 legislation introduced by Wright Patman (Texas, chair of Housing Banking and Commerce) and Lyndon Johnson (Texas, Senate Majority Leader and presidential candidate) created a new program, extending the SBA’s financing scope rather dramatically. Under provisions of the 1958 Small Business Investment Act, SBA could license a new type of lending corporation, the Small Business Investment Corporation (SBIC), which then could finance startup firms through long-term loans or purchase of their convertible debt, which was used as a match for private investment in the SBIC. The SBIC, ultimately using SBA dollars, could then make “loans” to small firms—a loan very close in function and subordination to equity or venture capital. The 1958 legislation was controversial; business interest groups opposed SBIC as “direct equity ownership of business by government.”
The need for this “near equity” financing arose because of the inherent structure of small business itself. Small business is composed of (1) firms which through scale, maturity and size generated sufficient sales and cash flow to reasonably be expected to pay down a loan; and (2) other firms young, very small and startup, with few sales that could not satisfy conventional bank due diligence. Until 1958, the SBA could lend only to the first, “bankable” small business. The SBIC was designed to fill that gap. As such SBICs constitute a major innovation in public financing of new, young startup firms. In 2013 more than 300 SBICs were in operation, guaranteeing nearly $18 billion in obligations. So extensive is the SBIC network that it has been referred to as the “fourth banking system” after commercial, investment and mortgage banking. If so, it is a little noticed element of “shadow banking.” The SBIC may be the first meaningful entry by economic developers into startup venture capital financing.
SBICs would be used by states as their model for state entry into small business/ startup financing. Since the early sixties, there has been a small explosion in SBIC-structured EDOs (not all SBIC licensed) at state and regional levels. These agencies are prime candidates for “siloization” in that they are based on specialized expertise, possess a unique funding stream and serve a limited clientele.
Interstate Highway Act
The 1956 Interstate Highway Act authorized $25 billion to construct 41,000 miles of interstate (and intra-city) highways and established the Highway Trust Fund to operate/finance the system. The legacy left by highway construction, however, may have been as important to economic development as the change caused by construction itself. The 1956 Interstate Highway Act has profoundly affected the history of our profession in that it has been incorporated into our continuing urban renewal saga. Interstate highway construction overlapped with Big City urban renewal to such an extent that the two became almost inseparable in our memory. This overlap requires the Act to be placed within the context of the larger urban renewal discussion. In the next chapter, which describes urban renewal at the city level, the interstate highway act is considered an “epoch,” one of six, that constitutes our Age of Urban Renewal. This chapter, however, concentrates on the Act and its impact on sub-state ED.
Postwar Big Cities and highways
Since the 1920s suburban decentralization had acquired increased prominence in Big City economic development strategy. Burnham’s 1909 Chicago Plan envisioned an extensive highway network from the CBD to the furthest periphery as the best strategy to maintain CBD dominance. Highways figured prominently in facilitating decentralization and as a solution to congestion, traffic and insufficient parking that allegedly drove residents to the suburbs. States were primary policy actors regarding non-Big City highways. Cities, of course, were primary in regard to streets and intra-city expressways/freeways.
The nation’s first limited-access highway (grade separation, ramps, no curb cuts) was New York City’s Bronx River Parkway (1923). It spawned parkways and a suburban boom in highway construction. By the end of the 1920s, Big Cities across the nation were developing freeway/limited-access systems. New York remained the pacesetter with the Henry Hudson Parkway and the West Side Highway (1931), followed by Chicago’s Lake Shore Drive (1933). The New Deal used highway construction as a job stimulus, increasing funding from $216 million in 1932 to over $800 million by 1936. New York City, for example, used federal aid for bridge and tunnel construction, and Los Angeles began planning for a regional freeway and bypass system, starting in 1937 with the Arroyo Seco Freeway. In 1937 FDR asked the federal Bureau of Public Roads to design a national system of toll roads. War shifted priorities, but in 1944 Congress authorized construction of a 40,000-mile toll-free national highway (including 4000 miles of Big City highways)—but “forgot” to include money to start construction (Altshuler and Luberoff, 2003, pp. 76–9). The Bureau of Public Roads, working with states (not cities), had by 1954 prepared maps indicating where the interstate would go.
After the war Big Cities developed plans and engineering to build city highways, and by 1956 there were 480 miles (completed or under construction) in the 25 largest cities—more than half in NYC, Chicago and Los Angeles (Altshuler and Luberoff, 2003, p. 79). Virtually no federal funds were involved, and all required eminent domain and removal of existing uses along the route. Cities were already building freeways on their own dime and initiative, bushwhacking paths through neighborhoods long before interstate highways. In 1955 the American Municipal Association, representing America’s Big City mayors, wholeheartedly endorsed an Eisenhower–Clay Commission Report estimate that 15 percent of the interstate highway system went through Big Cities and would carry half the total traffic—and account for more than half ($27 billion) of total construction costs (Altshuler and Luberoff, 2003, pp. 79–81). Postwar car registration, truck logistics and horrendous traffic made highway construction, by all levels of government, a first-order priority. In 1955 only 10 percent of highway spending was borne by the federal government—by 1961 that increased to 31 percent (Altshuler and Luberoff, 2003, p. 82, Table 4.1).
Interstate highway approval
It is not our purpose to reconstruct either the politics behind passage or the history that led to the Highway Act (Rose and Mohl, 1990). Routes and plans had been kicking around for a generation, and were updated by the 1954 Clay Commission. Legislation, however, was another matter; proponents could not agree for the better part of a decade what the bill should say, who should benefit and who would pay. Road contractors sparred with truckers; state highway engineers fussed with private auto clubs and local public works departments; and rural states had different ideas than urban states. A national advocacy group, Project Adequate Roads, assembled a coalition of road users, contractors and engineers behind a planned, toll-free highway system—but once it moved into detail, the coalition members fragmented. House–Senate committees also failed to put it all together.
Final agreement was reached in 1956 when its chief congressional proponents (Hale Boggs of Louisiana, George Fallon of Maryland and Virginia Senator Byrd) gave something to everyone: no special tax on truckers; funds to farm areas, urban and trunk roads that provided enough to each; and additional sums for the Big City systems (urban roads 90 percent federal reimbursement) and increased future year appropriations. At that point, New York Senator Wagner introduced legislation to compensate those relocated by construction; it was voted down. On June 25, the Senate voted 89–1, the House (by voice vote) on 26th, and the President signed it on June 30, 1956.
A shared belief: slums must be removed
Rural and farm states viewed interstates through their own prism, pursuing different objectives than Big City states. The latter perceived highways as a strategy for CDB-focused anti-decentralization, a strategy that also included the removal of blighted neighborhoods. Rural states saw the interstate as access to communities, regions and agricultural/mining logistics. Engineers, who planned the routes and managed construction budgets, wanted a direct, cheap easily constructed road that moved traffic fast, with minimum congestion, and got users where they wanted to go. In short, everybody fervently wanted to build a highway for their own reasons and terms—but beyond that, “forget about it.”
Federal and state highway engineers and truckers, in particular, were totally unconcerned with the urban renewal/slum clearance/decentralization agenda that motivated urban policy actors and city planners: “The federal Bureau of Public Roads and the state highway departments believed that their business was to finance and build highways and that any social consequences of highway construction were the responsibility of other agencies” (Rose and Mohl, 1990, pp. 65, 96). Construction contracts were managed to meet budget and time schedules, with minimum, if any, attention or concern for other factors. Route changes to avoid neighborhoods, go underground or install sound barriers did not enter their managerial calculus. In a 1947 speech to a US Chamber conference on urban problems, the federal director of the Bureau of Public Roads (Thomas A. MacDonald) dismissed the inevitable housing destruction, observing instead that “It is a happy circumstance that living conditions for the family can be re-established [through slum removal] and permit the social as well as economic decay at the heart of the cities to be converted to a public asset” (Rose and Mohl, 1990, p. 99).
There was nothing in the federal legislation or in the funding distribution formulas that directed state highways to provide relocation assistance to displaced families, businesses, churches or schools. When state highway departments signed contracts with the firms to prepare sites and build the roads, such contracts lacked procedures or funds for relocation. If someone else didn’t do it, relocation assistance didn’t happen.
Highway builders were clearly conscious of social consequences of Interstate route location. It was quite obvious that neighborhoods and communities would be destroyed and people uprooted, but this was thought to be an acceptable cost of creating new transportation routes and facilitating economic development. (Rose and Mohl, 1990, p. 97)
After routes were approved local governments were left out of decision-making and construction. State highway departments managed the projects, received and disbursed funds, wrote contracts and bid/managed contractors. The go-to place to resolve issues was the state legislature, which in many states Big City interests were not well served. Intra-urban highway construction across Big City neighborhoods was a state affair, with municipal bureaucrats, politicians and residents on the outside looking in. This was state-directed highway construction—not locally determined urban renewal.
While literally correct, however, that last sentence is complicated. While they may not have been able to meaningfully impact intra-urban highway construction, local officials did have a say in the routes—and they could have provided relocation assistance or developed alternative housing. Sometimes that happened; for the most part localities let state highway construction run through their city with minimal oversight. In a few instances, Boston being one, the mayor took on the state and tried to protect his neighborhoods—unsuccessfully. A goodly number of horror stories included in today’s textbooks and urban renewal literature cite neighborhoods destroyed by New Deal and postwar Housing Act slum removal/public housing or federal/state interstate highway construction as examples. Why did city after city allow their neighborhoods to be torn up? They were trying to bet the suburbs at their own game and “tame the automobile.” For that we can thank Victor Gruen, the father of suburban malls.
Highways, planning and refunctioning the CBD: Victor Gruen and Jane Jacobs Pound for pound, highways did the most damage to neighborhoods. Low-income minority neighborhoods and residents were devastated; but highways cut through all kinds of neighborhoods—or followed along water providing a wonderful “wall” that precluded access/use of the waterfront. Nothing generated more intense vitriolic opposition than highway construction. Politicians “felt the burn” and stopping highway construction became a sixties pastime, a source for community organizing and a catalyst to form neighborhood CDOs: “Public officials in most of the older metropolises were growing more skeptical about the efficacy of superhighway programs … [but] Short of wholesale demolition of the entire building stock and street system there was no way to make central city thoroughfares as suitable for automobile traffic as suburban highways” (Teaford, 1990, p. 165). The car, similar to the rifle, was the instrument by which individual preferences and decisions wreaked horrible consequences on the urban physical/social landscape. The car made suburbanization likely and possible, and without some accommodation, the car was likely to destroy the CBD. Enter Victor Gruen.
An Austrian, a planner and a confirmed socialist, known today as the “father of shopping malls,” Victor Gruen loved cities and downtowns. His problem was simple—he could not convince central Big Cities to embrace the car, the shopper and, believe it or not, walking. If the central city could not adapt to the car it was doomed. That is what the suburbs did—they accommodated the car. More than anything Gruen wanted to rebuild the CBD to compete with the suburbs’ access to the auto and walking. He tried to make the CBD the king of metropolitan retail/commercial.
In 1956, a decade and a half off the boat, Gruen designed a shopping center outside of Detroit: “Northland”—around its hometown department store, Hudson. With 163,000 acres and 10,000 parking spaces Northland was allegedly the nation’s first outdoor regional shopping mall. Gruen quickly followed up with Southdale in Edina Minnesota, an unknown suburb of Minneapolis. Southdale revolutionized suburban shopping center, spreading across the nation. Over the next two decades Gruen designed over 50 malls himself. The sprawl of malls was not in Gruen’s plan—and he wasn’t happy or proud. In 1978, despairing of what malls had become, he claimed developers had “bastardized his ideas” and he refused “to pay alimony for those bastard developments” (Gladwell, 2004). The father of malls had disinherited his children. Ironically, Southdale is about 15 minutes from the Mall of America (the largest mall in the nation, with over 500 stores and 12,000 parking spaces).
Fort Worth’s plan
While he was developing Southdale (1956), Gruen was also preparing Fort Worth’s CBD redevelopment plan. The goal behind that plan was to counter suburbanization. Up to that time, CBDs based on Le Corbusier’s Radiant City were gloried in density and separated economic activities into discrete compact areas, while integrating green spaces, parks and recreation between these dense uses. Pittsburgh’s Plan, grounded in the Radiant City, had guided that city’s Golden Triangle revitalization. The problem, as Gruen saw it, was that Le Corbu’s build-to-the-sky density fostered congestion. CBD congestion fueled suburban growth. Originally a disciple of Le Corbusier, Gruen searched for an alternative—and he found it in Frank Lloyd Wright’s Broadacre City.
Gruen’s dilemma, obviously, was to incorporate Lloyd Wright’s polycentric metro landscape to preserve the monocentric metropolitan area. The heart of the Broadacre suburb is its regional shopping center, which integrated the car and yet was a dense concentration of retail—in fact the regional shopping center was the CBD of the suburb (Gruen, 1964, p. 186). Gruen intended to convert the CBD into a shopping/consumer nexus that enhanced sales, pedestrian traffic and profitability. To remake the Fort Worth CBD in this image required a pedestrian-only CBD. This could happen if highways and freeways from all parts of the metro area led to the CBD and terminated in the parking garage at the edge of the CBD. Accordingly, his plan called for the CBD to be embedded in a ring of parking garages linked to highways by ramps. The traveler must park, get out and then walk into the CBD to shop—just like he/she did for the suburban shopping center. The shopper would willingly park and walk because the CBD provided the experience and pleasure that they expected. That meant the CBD had to be redesigned (Gruen, 1964, Part 3).
Multiple uses within a single block created excitement, variety and diversity. So Gruen’s pedestrian-accessed downtown was itself jumbled into blocks containing all sorts of use (office, commerce, retail, entertainment, culture and recreation). Streetlevel design encouraged retail and entertainment, but also included “inspirational” uses such as waterfalls, landmarks and viewing vistas. Extensive landscaping and beautification raised spirits and provided pleasure; and it was so compact it was walkable from one end to the other and then back to the car. Gruen’s Fort Worth plan’s timing was perfect. Fort Worth, and 70 other CBDs for which he developed plans, rejiggered to some degree its CBDs to accommodate the car-dominated modern world. They were going to beat the suburban mall at its own game.
Spreading across the nation, Gruen’s new downtown grabbed the attention of those who rejected Le Corbusier’s rigid segregation of uses: sterile and austere skyscraper density and functional modernist designs which built impressively up, but ignored, the street level. They rejected blocks with uniform setbacks, a sameness of spartan architecture that segregated office from retail, from entertainment. Rejected also were fountains, traffic circles and monuments that could not absorb the traffic flooding off Le Corbusier’s wide boulevards and freeways. All these conventional planning designs were exposed as postcards for suburban living. In 1958 Fortune magazine presented a series of high-powered articles based on Gruen’s image that hopefully would change how CBDs conducted their affairs. So successful was the articles that Fortune published them in book form as The Exploding Metropolis (Fortune, 1958). The articles included William H. Whyte’s “Are Cities Un-American?” and “Urban Sprawl,” but the one that got people going was Jane Jacobs’s “Downtown is for People.”
The exploding metropolis
Jane Jacobs praised Gruen’s downtown, likening it to a garden city that:
enlivens the street with variety and detail. Gruen’s plan [which] includes … sidewalk arcades, poster columns, flags, vendor kiosks, display stands, outdoor cafes, band stands, flower beds, and special lighting effects. The whole point is to make the streets more surprising, more compact, more variegated, and busier than before.
The plan’s beauty is that it mixes old buildings which are not destroyed with new: “Downtown streets should play up their mixture of buildings, with all its unspoken, but well understood implications of choice … where people can see them at street level” (Jacobs, 1958, pp. 145–6). Also streets should be narrow, short, and not choked by cars, offering continual choice to the pedestrian.
Jacobs saw in Gruen a fundamental critique of CBD standard redevelopment. To her, planners focused on a single block or a collection of blocks—at the expense of the entire stroll and the aggregate personal experience. The UR project was usually collapsed into a superblock that conformed to a planner’s codes and configurations. Each “project” was designed in isolation from the blocks around it: “the cultural superblock (Lincoln Center) is intended to be very grand and the focus of the whole music and dance world … but its streets will be able to give it no support whatever.” Downtown was chopped up into indigestible superblocks which did not relate to each other (Jacobs, 1958, pp. 162, 157).
In particular, Jacobs rejected ponderous collections of government architecture known as “civic centers,” which were doomed to failure: “Big open spaces are not functional for this type of civic activity.” This is why she believed CBD urban renewal would fail—because of the project approach which concentrates on blocks and superblocks. For her, the Moses-style UR project: assumes that it is desirable to single out activities and redistribute them in an orderly fashion … But this notion of order is irreconcilably opposed to the way in which downtown actually works; what makes it lively is the way so many different kinds of activity tend to support each other. We are accustomed to thinking of downtowns as divided into functional districts—financial, shopping, theater—and so they are, but only to a degree. As soon as an area gets too exclusively tied to one type of activity … it gets into trouble; it loses its appeal to the users of downtown. (Jacobs, 1958, pp. 161–5)
Half-hearted herds implement his plans
Jon Teaford’s reaction to Gruen’s Fort Worth plan was that it was the “culmination of twenty years of thought by American urban leaders and planners about how to thwart commercial decentralization and reinforce the existing single-focus city” (mono-nuclear). In the plan centripetal expressways carried traffic to a highway that looped around downtown Fort Worth. At each exit of the loop ample parking garages accommodated incoming drivers who then could [must] walk the remaining few blocks to work or shopping in the compact pedestrian business district. (Teaford, 2006, p. 49) Most cities only partially implemented his plans—the few that opened downtown pedestrian malls regretted the decision. Gruen’s new downtown intrigued city elites, but hard realities confronted its effective implementation.
Who was going to pay for all this? After all, much of the city’s tax base (the CBD) would have to be rebuilt. Revenue bonds and TIF would help, but future use and profits were not guaranteed. In those days, the federal government drove much of the urban agenda—by grants and such. On this issue, there was no rush to federal leadership in prescribing the form urban renewal should take. That well was dry. Almost all of the famous urban renewal projects of the 1950s were totally privately financed and consisted of major corporations building or rebuilding office headquarters. Post-1956 federal urban renewal legislation opened the door for big non-profit institutions, the famous “eds and meds” and middle/upper-income residential projects; they would assume an early 1960s’ prominence. None of these users thought in terms of a holistic CBD—they required financeable, phased construction built on superblocks, designed to achieve their own purposes. There was a reason why Moses-style urban renewal had been so popular: it fit the fiscal and financial realities of downtown redevelopment.
Conventional planners, on the other hand, left highway engineers to their devices because, in their mind, highways served two purposes: to connect the CBD to markets and metropolitan population centers; and if highway construction removed obsolete blighted housing and slums that drove city residents to the suburbs—so much the better. Planners like Harland Bartholomew (St. Louis) pressed for downtown development as the best solution to urban sprawl. Highway access stabilized property values and relieved congestion, both essential to CBD revitalization (Rose and Mohl, 1990, p. 57).
To most, highways, in the words of James Rouse, must “rip … through to the central core” if CBD redevelopment were to happen. ULI’s Urban Land encouraged surveying “blighted areas [to] provide suitable highway routes,” and urban developer James Follin saw urban highways as a “wide-open opportunity” to eliminate blighted housing and recapture central city land for redevelopment.” Even liberal mayors such as Detroit’s Albert Cobo publicly asserted (1954) that highway construction not only enhanced property values along their right of way but were also a “picture of beauty.” Kansas City’s city manager (L.P. Cookingham) stated: “no large city can hope for a real future without expressways that cleared slums and preserved the central business district” (Rose and Mohl, 1990, pp. 99–103). CBD redevelopers were not in the business of providing housing to slum residents. That was someone else’s job.
So, pre-1965 CBD-focused ED strategies lived in an alternate universe from that of 2016. Slum clearance by state highway departments was not a problem requiring their intervention. They shared with state and federal highway departments a common line of reasoning that Rose and Mohl characterize as a “two birds with one stone mentality”:
cities and states sought to route Interstate expressways through lower income or slum neighborhoods, using federal highway money to reclaim downtown urban real estate. Inner-city slums should be cleared, [including] blacks removed to more distant second ghetto areas, central business districts redeveloped, and transportation woes solved at the same time—and mostly at federal expense. (Rose and Mohl, 1990, p. 103)
After the 1960s the paradigm justifying slum removal was turned upside down—but in the decade after 1955 slum removal was not perceived as it is today. The average citizen didn’t like slums, and wanted highways. That the latter destroyed the former was quite acceptable.
And, finally, the thorniest and most horrendous aspect of this discussion: “Negro removal.” It is my belief that the first use of the expression was in a 1963 Kenneth Clark interview with the black James Baldwin. Jane Jacobs, Martin Anderson and Herbert Gans, early critics all of slum clearance and federal urban renewal, did not focus on black neighborhoods and black relocation. Anderson’s research found that two-thirds of those displaced who needed housing relocation were black and Puerto Rican. The Great Migration was, if anything, picking up steam, and African-Americans were flooding in large numbers to most Big Cities. Blacks inevitably settled in neighborhoods characterized as slums and blighted, candidates for urban highway construction.
Their timing, as political scientist James Q. Wilson would later observe, was as terrible as could be. Today no one questions that African-Americans were the most affected by slum clearance and the absence of alternative housing; it is clear that the characterization “Negro removal” is sadly and disturbingly appropriate. Highway and expressway construction, of course, did cut through white, ethnic and a few affluent areas on its way to suburbs; but, for the most part, those affected owned rather than rented, and were able to manage without having alternative housing provided.
The bottom line
The Interstate Highway program was the largest single source of federal aid to states between 1958 and 1966. By 1964, 2612 miles of Big City expressways had been built, with another 1600 miles under construction. That was a ten-fold increase in urban expressway mileage. Between 1956 and 1967 more than 300,000 households were displaced to make way for federal highways (urban and non-urban) (Rose and Mohl, 1990, p. 103). Alexander von Hoffman may have said it best: “The U.S. Interstate highway program, enacted in 1956, probably demolished more low-income neighborhoods, if it were possible, than either urban renewal or public housing” (2012, p. 15).
MID-CENTURY SUBURBS
As early as 1950, suburban growth rates were ten times that of the central city, and by 1954, 9 million lost souls had moved to the suburbs. The 20 years following war’s end were truly the breakout years of suburbia. Kenneth Jackson estimated that between 1950 and 1970 the suburban population more than doubled, from 36 million to 70 million—74 percent of the nation’s population growth (Jackson, 1985, p. 238). Average 1950–70 population growth for 17 metropolitan areas of the Northeast was 46 percent; their central cities declined by an average of 2 percent, meaning that average suburban population growth for these metros was 107 percent. Boston’s low of 35 percent suburban growth was dwarfed by Minneapolis-St. Paul’s 281 percent. New York’s suburbs increased by 4.26 million, Chicago 1.77 million, Philadelphia 1.33 million and Detroit by 1.82 million. Suburban homeownership left central cities with dramatically increased renter populations (McDonald, 2008, pp. 85–7). Contrary to the truism, Big Cities couldn’t chase their population. Milwaukee, Kansas City, Indianapolis and Columbus successfully annexed large amounts of land. For all the good it did—they still suburbanized.
Echoing James F. McDonald’s “suburbanization is the most important economic and social trend of the second half of the twentieth century” (2008, p. 85), our principal focus is the suburb’s effect on sub-state economic development. Also, incorporating the Big City suburban exodus into our perspective makes it easier to understand the sky-rocketing concern with decentralization. The massive population flow after 1946 electrified postwar Big City census figures and awakened not unreasonable fears for viability of central city hinterland dominance.
Our suburb starting point is that there is no “typical” suburb. Suburbs are not alike—they never have been, and we don’t intend to start here. Postwar/pre-1970 suburbs—labeled by Hayden as “sit-com suburbs,” Hanlon as suburban homogeneity and Jackson as the “cultural home of the white middle-class family”—have been well described by zillions of academic studies and intellectual critiques. There is no doubt a race/class dimension between city and suburb exists during these years—but income/ class can obscure a lot of internal diversity. First-ring suburbs captured the lion’s share of expansion; they often reflected the spilling over of ethnic lower/middle-class periphery neighborhoods across city boundaries and conforming to conventional neighborhood succession patterns. They may have looked much the same in the 1950s, but their subsequent evolution and political/policy development produced notable variation.
Levittown
Postwar suburbanization symbolically began on May 7, 1947, the opening day sale of Levittown New York. By May 9, developers had sold over 1000 housing units. Levittown built a variant of Wright’s rambler, and modeled its subdivision on Broadacre. Built by non-union labor, with restrictive covenants, it included for the first time kitchen appliances. Using Ford’s assembly line technique, Levittown added 30 units daily, selling 4000 units by year’s end. Ultimately, the Levitt Brothers sold over 17,000 homes in the subdivision (1951). Levittown’s suburban business model spread through the East by the early 1960s.
Ticky-tacky Levittown “little boxes” (coined in 1962 by Malvina Reynolds and made famous by Pete Seeger’s 1963 ditty) provided grist for academics and writers (John Updike, for example). TV shows Leave It to Beaver, Father Knows Best and The Adventures of Ozzie and Harriet imparted a visual image to the aspirational “American dream.” Despite their inaccurate characterization of postwar families, they became the avatar for suburbs.
The suburban residential complex threw off substantial profits, created new occupations and redefined the BLS-FIRE sector classification. In short, a “subdivision developer” suburban real estate industry exploded after the late 1940s. This new sector reflected, and created, consumer demand through its understanding of the American dream and by recognizing links between housing, car and employment. Separating housing finance from housing construction, the subdivision-industry complex built cheap, small capes outside a Big City unable to annex. The inability to annex differentiated western from eastern cities in this era (McDonald, 2008, p. 90).
The Litany and the Dilemma
There was a litany of explanations for the postwar suburban explosion. It is helpful, if not important, for the reader appreciate this litany; it is critical to an understanding of suburbs and the “suburban paradigm” that emerged in future years. Suburbanization’s immediate postwar driver was a housing shortage of GI new households and obsolescence, and probably blight/racial change as well. The rapid household formation that followed demobilization left the greatest generation and their newborn baby boomers sleeping (or not) in the bedrooms of their less than delighted grandparents’ homes/ apartments. Deluded by (1944) GI Bill mortgages,3 recent car purchases and newly built freeways, millions of WWII veterans fled central cities (and their parents). The latest version of the American Dream, suburbs, had commenced—to the relief of all three generations. Other reasons have been advanced as well.
Perhaps the most damning has been suburban linkage to racism. Suburban in-migration was driven by racial change in the central city—which, at some level, is obviously accurate. Once there, white suburban residents closed the door to African-American in-migration through a variety of techniques, including racially restrictive covenants, real estate steering and exclusionary zoning. Income and racial segregation were seen as two sides of the same coin. The Supreme Court, in Shelley v. Kraemer (1948)—successfully argued by NAACP attorney Thurgood Marshall—outlawed such covenants, but real estate practices circumvented much of the ruling. Exclusionary zoning persisted until checked by the 1975 Mount Laurel (New Jersey) decision.
It is also asserted that the federal government stimulated/facilitated suburbanization in general, and postwar AHA suburbanization in particular. New Deal residential mortgages (FHA), banking reforms, housing tax incentives and the GI Bill rendered the federal government complicit in racial discrimination. Highways built since World War I with federal encouragement picked up considerable momentum in the postwar era. Most highways were state funded and freeways locally funded, however. Highways certainly facilitated residential mobility and the relocation of manufacturing; the decline of the CBD during this era was attributed to highways, which dispersed the city population while congesting the downtown. The trouble is that Big Cities were building freeways and expressways to counter perceived decentralization problems. Highways reaching out to the farthest suburbs had been a longstanding component of Big City and metropolitan planning; indeed, suburban highways were a central feature of Burnham’s 1909 Chicago Plan and the City Beautiful. If so, then planner/economic developer paradigms were incorrect. In building highways, they thought they were helping to mitigate suburbanization. The federal government had its own agenda for its actions.
There is, one supposes, “blame” for suburbanization (i.e. many judge it “bad”). Maybe we shouldn’t be a polycentric metropolitan area—but we live in one today. Two factors suggest strongly that it is time to move on. Firstly, at the time of this writing we are a majority suburban nation and have been for almost a half-century. Secondly, there is an inherent “dilemma” that complicates, frustrates and distorts our normative images of suburbia. Many of us want to live there, even if we “shouldn’t.” This dilemma was evident from the beginning and is expressed in Robert C. Wood’s pioneering work Suburbia (1958). Wood, a Harvard–MIT scholar at the time, later served as HUD undersecretary (1965–69) and (temporary) secretary.4 He is a principal author of LBJ’s Model Cities.
A final word is due my friends and neighbors in my suburb, Lincoln [Massachusetts]. On balance the judgment of this book is not favorable to suburbia and they may wonder why I choose to live to live in a place I criticize so strongly. The answer is simply that my professional opinion should never be confused with my personal tastes, and the fact that I recommend a general philosophy and outlook as desirable does not mean that I have succeeded in living by it. Lincoln is undoubtedly an anachronism and it is probably obstructive to the larger purposes of the Boston region. But it is a very pleasant and hospitable anachronism, and while it exists, I am quite happy to indict myself. (Wood, 1958, pp. vii–viii)
I might add, Wood not only lived in a suburb, he also worked in one—Cambridge.
Suburbs exist; they are not going away in my lifetime, and some of them are active in ED policy-making. Suburbs have impacted our history greatly, and they form a prominent element of our contemporary physical landscape. They deserve a place in our history—and to the extent there is something distinctive about suburban ED should be noted.
The Selling of Suburbs
The South wasn’t the only product sold in the postwar era. Suburbs were sold as well. Many believe the “selling of the suburbs” by subdivision and mall developers is an important explanation for postwar suburbanization. Postwar suburbs, often unincorporated areas, developed around subdivisions and malls. Unlike the central city, suburbs did not grow outward from a core area (CBD), but instead reversed the pattern by developing a CBD after initial subdivisions were in place—or never built one at all (unless a city hall/government office with a post office next door is a CBD). Suburbs often develop around independent and semi-autonomous neighborhoods.
In one of this history’s more outlandish misadventures, I propose we consider subdivisions/shopping centers/malls and industrial/office/technology parks as specific economic development strategies characteristic of suburban economic development, at least in this era. If we do so, then real estate developers once again return to their role as private economic developers—a role they had played since the 1890s (and, ironically, were playing in the halls of Congress engaged in public housing, slum clearance and CBD urban renewal policy-making). Suburban private developers, however, were only half of a hybrid growth strategy, the other half being suburban municipal (county) planners/city managers. While not exactly the “odd couple” of public/private partnerships, this hybrid coalition was pervasive in early (especially) suburban economic development.
Weiss (1987) has constructed such a hybrid model, observing a post-World War I “working relationship” with the comprehensive planning movement. J.C. Nichols (our first suburban mall developer in the 1920s), Weiss contends, convinced professional planners that substantial public involvement was required if suburban real estate developers, Weiss’s community builders, were to successfully develop a large subdivision. The nub of the problem was that the cost of land and length of time required to sell units constructed on that land rendered financing either expensive or impossible. Lenders needed assurances beyond the security offered by the subdivision’s assets. Moreover, prospective owners purchasing units on newly developed subdivisions required assurances that subsequent owners/builders would not cheapen (undesirable uses) or adversely affect their property values. Such assurances were originally provided through a variety of restrictive covenants administered by a subdivision homeowners’ association.
But these covenants, discriminatory or otherwise, were only a partial solution: they could not, for instance, carry over to adjacent parcels of land outside the subdivision; nor could they ensure the necessary infrastructure, particularly streets and public services, was available. For this set of assurances, public sector participation was required. Public participation also came in the form of the subdivision’s inclusion in the community’s comprehensive master plan, and critical specifications (lot size, setbacks, building codes, fire/safety regulations) included in zoning ordinances, codes and other regulations approved by the jurisdiction. Infrastructure required additional commitments in the community capital budget, and street construction/maintenance countenanced sustained public involvement. To be successful, subdivisions (malls, industrial/office parks) required detailed and sustained partnership between public and private actors. If so, subdivision and mall development was a public/private ED strategy long before Levittown put its first shovel into the ground.
In any case, subdivision and shopping center construction took off after the war; by 1957 the ULI was publishing guidelines on shopping center development. During these years, retail matured into a pillar of the suburban economic base. Planned retail centers (all sizes) grew from fewer than 1000 in 1950 to over 25,000 in 1984 (40 percent of all retail sales) (McKeever, 1977, p. 13). Eye-catching regional shopping centers became the skyscrapers of a suburban low-rise downtown. They sprang up across the nation: Northgate near Seattle, Shoppers’ World in Framingham near Boston, Northland near Detroit and in 1962 the Randhurst Center (“the largest shopping center under one roof”) near Chicago.
Shopping centers were designed to “tame the automobile,” accommodating its use through easy access to highways and an internal road system that compelled customers to park their cars and walk to pedestrian-only buildings.5 “Anchors” for larger suburban retail centers were department stores and grocery stores for the smaller centers. By 1960 shopping centers included such diverse and varied uses as adjoining office parks and apartments, medical centers, movie theaters, food courts and even light entertainment, fountains and mini-landmarks under their weather-controlled roof. The ubiquitous role of the car, however, created a “cycle of dependence”: the car was how one got to the shopping center, and the truck how it was supplied; suburbs as initially built rested on the car and streets, requiring future users to travel by auto. The cycle of dependence became a built-in feature of suburban lifestyle.
Subdivision/mall growth strategy created occupations and businesses to service suburban housing and commercial/industrial development. This in turn drove suburban demographic and economic growth. Aside from conventional real estate sales practices and a “you build it, we will come mentality,” no municipal government promotion (“boosterism”) was required. Real estate, housing, commercial trade, personal services and residential banking developed into key elements of its emerging economic base. Housing proved an excellent generator of small business, with its network of supplier/ contractor/logistics and consumer/service businesses. Personal services (restaurants and entertainment) added diversity—at a time of incipient deindustrialization, suburbs instinctively diversified.
One does not need public economic development in this environment. Accordingly, early growth-oriented suburban planning departments served a double duty (working with local chambers that fostered small business growth and entrepreneurial social integration) to handle run-of-the-mill economic development demands (liaison, regulation compliance). Economic development was handled by the subdivision/mall/ planner nexus, supplemented by small business, social networking and occasional advocacy, chambers. There was such a thing as “suburban economic development” after all.
A final suggestive thought. This section applies to “Big City suburbanization,” the residential suburb and not the shopping mall suburb; and, given it centers on subdivisions, not manufacturing decentralization, applies more to East Coast and middle Atlantic suburb formation than Midwest, where manufacturing decentralization played a prominent role. Implied in this ED policy-making scenario is the policy system that it is encased within. East Coast Big City suburbs (upstate New York, New England) derived their origins from the Yankee Diaspora; formed towns where states played a strong role in ED, the heart of the American Progressive Movement; and grew up with “structural reform and City Efficient” business elite values. In this cultural atmosphere one can expect community development rather than mainstream economic development to develop. These are the CBD and central city commuters whose principal goals were home and hearth, low taxes and minimum public services—not growth. ED policy was not likely to be important or highly valued, or concerned with the suburb’s jurisdictional economic base. Housing, traffic, education and other “people” services were highly valued. What ED there was focused on neighborhoods, people, and in this culture was often expressed through planning. In these communities/ towns ED’s overlap with planning is most visible.
Conversely, some suburbs—through planned attraction, war production decentralization or simply because of innate location advantages—developed a manufacturing economic base. As John F. McDonald asserted:
The change in location pattern was the result of deaths of firms in the central city, births of firms in the suburbs, employment declines in firms in the city, and growth of firms in the suburbs. Only a relatively small amount of the net change can be explained by the direct relocation of firms from the central city to the suburbs. (McDonald, 1984)
Manufacturing firms increased suburban production by taking advantage of new, single-story, spread-out facilities near cheap, highway-accessible land—while their land-locked central city facilities produced as best they could so long as long as they were profitable. When profits declined, shutdowns followed. Suburban facilities increased production; employment and population growth were sure to increase. Through the fifties and early sixties, the hard truths were evident, but hope for recovery still existed. McDonald believed the bottom fell out in 1968, when riots prompted a rush to exit the central city (McDonald, 2008, p. 97). If this scenario is accurate, change in product demand and manufacturing/logistical technology drove suburban manufacturing growth. Suburbs did not need to “steal” central city manufacturing through public or private ED attraction programs.
Industrial parks fit well into the real estate/planning-based ED policy fabric. In the 1940s and 1950s the industrial park was just that: “Following World War II, the pace of change quickened and the modern industrial park, as an outgrowth of earlier industrial districts, emerged as the major new trend in industrial development” (Beyard, 1988, p. 18). Industrial parks, both private (the overwhelming majority) and public went up by the hundred across the nation—mostly in suburbs. Industrial parks, congruent with suburban economic development policy-making dominated by comprehensive planners, however, were transitioning from manufacturing into other sectors. During the 1970s and 1980s, as the national economy shifted noticeably from manufacturing to service and technology, industrial parks became “business parks”—moving on later to science or technology parks.
This line of thought provides a context to evaluate the various suburban types that emerged. It offers an explanation why there is no single “suburban” style of ED within a metro area, or across the nation. Call it metropolitan pluralism, political fragmentation, multi-nodal nuclei or sprawl (each describes the same phenomenon), postwar suburbanization, beyond electing state legislators to defend suburban autonomy, radically revolutionized the hinterland landscape. For Abbott (1981, p. 184), the “main political actors are the central city and the suburban governments that have rapidly been developing independent economic and political resources that enable them to treat the central city as a peer.” “Political lineups tend to shift from issue to issue.” But the foundation of metropolitan pluralism rests upon what we used to call “suburban autonomy.” In several ways, the various suburban types that developed during specific time periods closely mirror our onionization of EDO structural types.
It would take more than a half-century, however, before the Policy World appreciated the enormous municipal diversity inherent in suburbanization. In the postwar world, suburbs were a stereotype—and a negative one at that. In the fifties they were Hayden’s “sitcom suburbs”—residential, family-centered, small town, “everybody knows your name” suburbs where parents live boring, Organization/Mad Men lives that drove their children away. My research strongly suggest that suburban policy systems were (and are) not “Big City writ small.” Local elites, small town democracy, absentee-commuter suburbs, parochialism and their own peculiar demographic footprint or jurisdictional economic base meant an amazing variety of policy systems developed in our Big City hinterlands.
As far as economic development was concerned, some suburbs wanted to grow; others wanted no part of growth. Some suburbs delegated economic development to the county, spending their “policy time” in other policy areas such as schools. Gated communities and “Privatopia”—a phenomenon later to be discussed—decentralized suburban policy systems. Home and family dominated many a suburb, while others exhibited such population turnover that no one took serious interest in suburban policy making. Private city-builders (mostly in the South and West) like Del Webb (retirement communities) and “corporate” Woodlands Texas (started in 1964) or Irvine California created privatized policy systems. Postwar Rouse new towns like Columbia Maryland followed in the footsteps of Tugwell’s Depression-era new towns, creating a more “progressive” policy system. Suburbs, even in the postwar years, were never pure Republican, bastions of insipid middle-class conservatism and neo-liberal Privatism. If you want diversity, you can find it in suburbs and suburban policy systems.
Describing suburban economic development is going to be a challenge in future chapters. In that 53 percent of Americans in 2015 live in suburbs—and 21 percent in rural areas—hinterland economic development cannot be ignored. Economic development cannot be discussed solely in terms of Big Cities. The page has turned in our economic development history. To capture transformation in the urban landscape that revolutionized postwar America this history expands its definition of competitive urban hierarchy to include not only the competition among Big Cities, but also competition within metropolitan areas (Florida, 2013).
TICKING OF THE CLOCK: THE SECOND NEW ENGLAND TEXTILE WAR
I remember, as a young Salem Massachusetts resident, a city with a large but closed textile mill at which members of my family had once worked—but no longer. For the following decade after its closing I walked past the closed facilities, passing along the way a building a couple of blocks away. The building/facility, owned by the Digital Equipment Company (DEC), made a widget of no consequence to the young curmudgeon. And he continued on his way.
The mill was the Pequot Mills, originally named the Naumkeag Steam Cotton Company. It produced “Pequot cotton sheets.” Founded by a sea captain (Nathaniel Griffin) in 1839, the site allowed ships to unload southern cotton directly to the steam-powered plant. By 1847 the facility ran 30,000 spindles and 640 looms. Polish and French-Canadians were its workforce, the latter from its beginning. The facility grew to 20 buildings—only one of which survived a 1914 fire—and were completely rebuilt and electrified after 1916. At its WWII peak Pequot employed 2725 workers. In 1933 an eight-week wildcat strike over layoffs and Taylor-esque labor studies designed to increase efficiency garnered national attention. The company yielded to the workers’ demands of “no research, no layoffs” (Chomsky, 2008). The mill was Salem’s largest manufacturer. In 1949 Naumkeag purchased the Whitney Mill in Spartanburg South Carolina, operating both plants until 1953 when the Salem facility was closed and 800 workers hit the streets. Workers as late as 1952 had agreed to work loan increases. The firm merged in 1955 with Indian Head Mills, and in 1976 was purchased by a Dutch conglomerate.
Massachusetts and Rhode Island textile-related factories shut down over the decade following the war. They didn’t call it deindustrialization back then, any more than they did in the 1920s or the 1890s.
Employment in Massachusetts’ woolen and worsted sector plummeted from 49,000 in 1946 to 25,000 in 1953. In cotton goods, the number of jobs sank from 35,000 in 1946 to 19,000 in 1953. Due largely to declines in these industries total factory employment in the commonwealth fell from 582,000 in 1947 to 531,000 in 1955, a drop of 9 percent … . The economic difficulties of the region were known as “the New England problem.”6 (Koistinen, 2006, p. 326)
Massachusetts’ Reaction to Textile Deindustrialization
Maine was the first state to formally respond to postwar textile deindustrialization. Maine’s pioneering answer, devised to conform to restrictive state gift and loan clauses, was the Development Capital Corporation (DCC), approved in 1949. Vermont, Connecticut, Massachusetts, New Hampshire and Rhode Island copied Maine, approving their own versions during the 1950s. The DCC model was a quasi, mostly private hybrid EDO, legally outside state government. The Maine DCC borrowed private funds to make loans to firms, indirectly guaranteed by hedge-like state mortgage funds. With the DCC’s minimal state governmental support, Maine’s private sector was left to fend off interstate competitive pressures. The reader might remember the DCC as the “Maine IDB model,” discussed earlier.
Massachusetts, however, was the New England regional leader—and ground zero of textile deindustrialization. In 1946 its Democratic governor, Maurice Tobin, filed a bill to establish a new state economic development department to foster growth in manufacturing. The new department would replace the underfunded and ineffectual 1929 Massachusetts Development and Industrial Commission. Despite solid chamber support, the legislation failed.7 To compensate, budgetary and staff increases were provided to the ineffectual commission.
From the Massachusetts textile industry, the problem was defined as an unemployment insurance-related issue—not as a competitive business climate confrontation. The state unemployment fund required firms that laid workers off to pay more into the system (merit rating). Driven by union support, Massachusetts unemployment was generous by national standards, a serious business climate issue to be sure.8 Chronically underfunded, relying on annual subsidies and debt issuance to compensate for chronic deficits, bankruptcy was never out of the question. Throughout the 1950s, Republicans and business groups sought unemployment reform: bill after bill was introduced, going nowhere—on chamber approvals, competing counter bills, extreme partisanship and gubernatorial vetoes. Unable to secure reform, textile firms saw little advantage in discharging workers, and instead closed down.
A Republican governor, Christian Herter, was elected in 1952 with a strong ED platform—and hope for reform increased. Herter’s inauguration address called attention to the unfavorable Massachusetts business climate: “There has been built up throughout the entire country the feeling that Massachusetts is an unfavorable place either for the development and expansion of its existing industries or for the attraction for industries from other parts of the country.” But reform expectations too were smashed when an extremely weak compromise reform bill was finally approved in 1954. The bill provided virtually no relief to the textile industry. To rub salt in the wounds of business climate reformers, “Herter took no action to revive the unheeded 1952 recommendations of legislative special commission that the state’s corporate taxes be eased” (Koistinen, 2006, p. 338). Business regulatory issues, real or imagined, elicited little response from the governor or Democratic-controlled legislature.
So Herter chose another path. In his 1953 inauguration speech, Herter had also decried “ineffective promotional and development programs.” Rectifying this shortcoming then became his principal economic revitalization strategy. So Herter revived the earlier Tobin initiative and secured approval for the first cabinet-level state economic development department in Massachusetts history, the Department of Commerce (approved in 1955 with a $551,000 budget and eight staff). The Department of Commerce was intended as the state’s counter to textile deindustrialization through intensified nationwide promotion, attraction and business retention. Democrats and unions lined up—in support! The American Federation of Labor (AFL) believed the new EDO would “attract new industries and encourage the expansion of one’s presently located here” (Koistinen, 2006, pp. 339, 341).
Herter also created a second state economic development agency, the Massachusetts Business Development Corporation (MBDC).9 The MBDC (copying Maine’s DCC) borrowed funds from banks and insurance companies to make loans to manufacturing firms unable to secure conventional bank financing. MBDC’s approach provided access to capital otherwise not available. Nearly all loans were fixed asset and working capital loans to manufacturers moving into the state. The MBDC issued several hundred loans targeting high unemployment geographies.
From this one can hypothesize that late-stage sectors/firms define their problem in terms of location factors responsible for high costs (taxes, fees, regulatory costs). The underlying cause, commoditization, lies outside industry, state or local control. Accordingly, state and sub-state policy systems can employ any number of ED strategies (tools, programs) to deal with their effects. That these strategies actually counter the root problem is less critical than being congruent with the prevailing ethos, culture and politics of the policy system—and they attempt a plausible solution to involve policy actors, including public opinion.
In any case, textile decline played out over the next two decades. New England lost a great deal of its textile sector to the Carolinas and foreign competition. One New Bedford textile mill serves as an interesting but ambiguous firm-level example. This particular mill, built in 1927, was the headquarters of the Hathaway Manufacturing Company—known for its expansive offices featuring oak and mahogany paneling and a marble fireplace. Confronting the 1950s’ textile decline, Hathaway bought out Berkshire Fine Spinning and became Berkshire Hathaway. By 1962, however, this textile behemoth was closing plants to cut costs, using the proceeds to buy back its stock. A 34-year-old investor, Warren Buffett, saw in Berkshire Hathaway an opportunity to buy cheap and sell dearly; so he acquired a majority stake in the company. After a brutal personal fight with Berkshire Hathaway’s owners, he tossed them out in 1965.
Buffett closed the plant completely in 1985, selling (in 2000) the 18-acre facility to an entrepreneur making military parachutes. The facility has been listed for sale since 2008, and at the time of writing is on the verge of being demolished as New Bedford’s mayor is concerned the present owner may lease part of the facility to process “medical marijuana.” To add to the merriment, preservationists may apply for landmark status. Buffett, in any case, retained control of the name. Today, sans textile mill, Berkshire Hathaway, headquartered in Omaha, is the ninth largest public company in the world.10 How one views or interprets this example can deliver an interesting discussion on deindustrialization, but New Bedford probably couldn’t care less—it’s stuck with a bombed-out eyesore.
Massachusetts’ Neighbors Respond to Textile Deindustrialization
Rhode Island possessed a substantial textile industry presence—second only to Massachusetts—and suffered similar deindustrialization simultaneous with Massachusetts. The Democrats had dominated state politics since the 1930s; in 1951 Democrat Dennis Robert was governor. The business community through the 1950s focused on business climate reform, also singling out unemployment taxes paid by businesses. Like Massachusetts, a strong union opposition blocked their initiatives in the state legislature. A compromise reached in 1958, similar to Massachusetts, yielded very little in terms of unemployment reform or business climate tax reductions. Governor Roberts in 1951, however, launched several ED initiatives to counter textile deindustrialization.
First, Rhode Island upgraded its state promotion commission to full departmental status. And in 1952 Roberts secured creation of a Maine-style DCC agency tasked with building and leasing industrial facilities, thereby increasing “ready to lease” (i.e. shovel-ready) speculative sites. In 1957 he formed a commission to study whether providing state funds to localities for such facilities was helpful. The commission said yes, and the next year the legislature approved creation of the Rhode Island Industrial Building Authority—winning a referendum to do so. The 1957 constitutional amendment referendum permitted a Rhode Island version of the “New England model.” Finally, in 1958, Roberts created a state Science and Research Council to coordinate existing research efforts and seek new ones. This may be the first state technology EDO (Koistinen, 2006, pp. 348–9).
Edmund Muskie, Maine’s Democratic governor (the first since 1929), created its first state-level ED cabinet department in 1955: “Expanding Maine’s existing promotional commission into a more effective government department was the leading item on the reform agenda.” And, in 1957, at Muskie’s urging, Maine created its Industrial Building Authority (IBA) to provide state assistance to local industrial corporations (Koistinen, 2006, p. 349). The IBA, however, did not conform to state constitutional precedents, thereby requiring a subsequent constitutional amendment (14-A). Thus, Maine, along with Rhode Island, successfully approved a constitutional amendment to allow the IBA, and Maine then had an IDB in its quiver. In the mid-1950s both New Hampshire and Connecticut also approved legislation authorizing the creation of Maine-style DCCs. In the mid-1960s, under intense pressure from states with more aggressive forms of IDB, New England states took another bite from the IDB apple, passing a second round of legislation and constitutional referendums (New Hampshire followed the Oklahoma model, and Maine and Vermont that of Kentucky).
What’s Going On?
The reader might note that each state essentially followed the same path and employed similar (IDB, attraction and promotional) strategies. They encountered the same process issues and difficulties in approving strategies that did not directly address deindustrialization’s core problem. Partisanship was not a factor—every New England state, Republican and Democrat, followed a fairly identical approach. Muskie, like Roberts, Tobin and Herter (governors), led his state’s ED response to his state’s manufacturing decline. That raises a question: Where were county and municipal governments in this story?
Where is Lowell, New Bedford, Hartford or Providence? Deindustrialization’s effects were intensely felt at the municipal/town level, by their chambers in particular. Some responded, but did so haphazardly, episodically, and almost always ran afoul of state constitutions and judicial precedent. Nearly all state court decisions rejected reactive local government ED initiatives. In 1954 the state legislature authorized the voluntary formation of local Industrial Development Commissions (IDCs), which were supervised by the State Department of Commerce.11 Taxpayer funding was limited to 1/20th of 1 percent of the jurisdiction’s assessed valuation, and capped at $50,000. Appointments were made by the local legislature (town boards). The IDCs were authorized to research, advertise and manage prospects, but were cautioned not to provide “inducements” or “package deals”—but not prohibited. They were urged to work with other local EDOs (chambers), and direct financing could only be provided by the newly created state MBDC.
The problem became defined as countering promotion/incentives thought relevant to the flight of textile firms. That turned out to be the IDB. So each state attempted in their own fashion to forge an IDB, but each encountered state constitution gift and loan clauses—cemented into law by long-standing judicial interpretations and precedents. Combined with a hesitant policy process, creating EDOs able to bridge the gap between private firms and public monies, the best the region could do was to copy the Maine version of the IDB—which wasn’t an IDB at all. Later a second round of reforms devised a limited IDB program. Interestingly, at no point did it enter the discussion that the three states “stealing” their textile firms (the Carolinas and Georgia) never approved IDB authorizing legislation in this period. When finally created, New England state EDOs:
+ favored business retention strategies that, through local EDOs, issued loans and developed speculative shovel-ready sites for existing and relocated firms;
+ launched “defensive” promotional programs, ostensibly designed to get the word out that New England was a good place to do business—but, I suspect, intended mostly to reassure domestic firms that New England remained viable;
+ flirted with startups (manufacturing/technological—gazelle-like firms), but taking few firm steps in that direction.
As pressure mounted, Maine and Rhode Island approved constitutional amendments that widened the permissible range of state government activity for assisting private corporations. Massachusetts, the regional leader, remained the most hesitant. Perhaps sensing a business climate confrontation strategy led only to “a race to the bottom,” a strategy that could not be adopted due to power balances and priorities of actors within its policy system, mostly New England states adopted defensive retention strategies that didn’t stand a chance of retaining textile firms, but offered some hope at economic stabilization. These fledgling efforts will bloom into a comprehensive state-level community development–private business strategy a generation later in a Dukakis administration.
New England’s Struggle against Textile Deindustrialization Shifts to Congress
New England turned to the federal government for help during the 1950s. Deindustrialization or an adverse business climate, whichever one prefers, had been redefined to a problem caused by unfair southern incentives and business climate advantages. New England congressional–Senate elected officials assumed aggressive positions limiting federal “incentives” which, in their view, unfairly subsidized regional competition. Senator Kennedy was especially aggressive. He argued:
The southward migration of industry from New England has too frequently taken place for causes other than normal competition and natural advantages. Since 1946, in Massachusetts alone, seventy textile mills have been liquidated, generally for migration or disposition of their assets to plants in the South or other sections of the country. Besides textiles, there have been moves in the machinery, hosiery, apparel, electrical, paper, chemical and other important industries. Every month of the year some New England manufacturer is approached by public or private southern interests offering various inducements for migration southward. … In 1925 New England had 80 percent of the (cotton textile) industry, now (1954) it has 20 percent.12
Kennedy criticized the federal $0.75 minimum wage that compared to Massachusetts’s $1.64. He attacked “federal tax amortization benefits” (IDB-related federal tax abatement) that disproportionately granted benefits to southern plants and federally regulated shipping rates that he alleged “discriminate unfairly against New England.”
Apparently, “Muskie was no Jack Kennedy.” Muskie continued his economic development focus after his Senate election. In June 1963, as a member of ACIR, he participated in its report A-18 which investigated IDBs. That report outlined criticisms and proposed reforms to restrict usage of the federal tax abatement and urge states to curb abuses. The conclusions of this report were rejected by Muskie, who dissented formally—which I cite as a commentary on Maine/Muskie’s different approach to economic development. Maine, it turns out, did not define economic development like Massachusetts:
I do not concur in the negative conclusions about industrial development bond financing expressed above. (1) States and their local governments should be encouraged—not discouraged—to attack problems of economic stagnation and underemployment; (2) abuses (of the IDB) have not been prevalent and … do not constitute a basis for condemning the self-help efforts of State and local governments; and (3) providing opportunity and incentive for industry and employment, through a free enterprise economy is a proper and legitimate concern of local government.13
New England’s cohesive (except for Muskie) federal delegation, however, continued its advocacy in fits and spasms for over three decades—climaxing in the middle 1970s—to advocate federal action to ameliorate “southward migration” of New England firms. The southern business climate advantage was believed unfair, if not immoral, for its inability to properly sustain individuals and families. New England’s solution was not a race to the bottom, but rather required the federal government to compel the South to “climb to the top.” Textile deindustrialization had escalated into a federal as well as state/sub-state economic development issue. New England’s textile war with the South, like the Spanish Civil War, served as a shadow struggle masking a deepening divide between regions.
Judicial Decisions as Embedded Political Culture
Incentives, public funding of private firms and aggressive local action seemingly violated New England’s collective sense of how economic development should be handled. The South followed a different approach: that New England’s policy systems included actors, notably unions, that limited business influence—and redefined economic development away from Privatist growth through business corporations. These are key Progressive values. New England states had approved/amended state constitutions, Massachusetts as early as 1780, to reflect these values. More than a hundred years later these statutes were interpreted by state courts reacting to 1950s’ economic development legislation, programs, tools and strategies. It was not very pretty. Using Maine and Massachusetts as examples, New England judicial IDB interpretations rendered difficult 1950s’ efforts to combat perceived southern IDB incentive competition.
The critical interpretation by a Massachusetts state court set the stage. Lowell v. City of Boston, 111 Mass. 454 (1873), narrowly defined, and severely limited, the “public purpose” required if public funds were to be used to benefit private entities or projects:
The application of the rule has grown in vigor through the years, so that it continues today as a controlling force in dealing with the expenditure of public funds … In it lies the key to understanding the position of the commonwealth toward business inducements.
The original Lowell decision involved eminent domain. The decision established a precedent that affected Massachusetts economic development over the next 100 years (Tilden, 1966, p. 15).
The 1873 Lowell decision (and several subsequent decisions) were restated in a 1958 judicial opinion relevant to the IDB initiative:
It is a fundamental principle of constitutional law frequently declared that money raised by taxation can be used only for public purposes and not for the advantage of private individuals … The paramount test should be whether the expenditure confers a direct public benefit of a reasonably general character … to a significant part of the public, as distinguished from a remote and theoretical benefit. (Tilden, 1966, p. 16)
That narrow public purpose extended to town and city governments as well—thereby inhibiting public sector business assistance programs at the local level.
Compared to other states, this was a very restrictive definition of public purpose, and the restricted definition extended to eminent domain and the benefit of public credit to private enterprise. The 1953 legislation creating the Massachusetts Business Development Corporation was mindful of this limitation, compelling a “Massachusetts-style” New England IDB that involved only an indirect state guarantee of private financing. The funds used by the MBDC for direct lending were acquired through pooled loans from private banks and insurance firms—not public dollars. In effect, Massachusetts gift and loan statutes and judicial interpretation of them prevented the state from devising public tools to assist Stage 4 businesses in decline.
Maine’s counterpart to Lowell v. City of Boston was Jordan v. Woodward (1885), which ruled that:
Strictly speaking, private property can only be said to have taken for public uses when it has been so appropriated that the public have certain and well defined rights to that use secured, as the right to use the public highway, the turnpike, the public ferry, the railroad, and the like. But when it is so appropriated that the public have no rights to its use secured, it is difficult to perceive how such an appropriate can be denominated a public use. (Beck, 1966, p. 25)
In 1871 the Jordan decision was the basis to deny Maine’s sub-state jurisdictions the authority “to pass laws enabling towns, by gifts of money or loans of bonds, to assist individuals or corporations to establish or carry on manufacturing of various kinds.” A year later, in Allen v. Inhabitants of Jay, the court took a restrictive step further in denying assistance to a manufacturing firm, saying that once a loan with public funds has been made: “The bonds and money raised from their sale become the bonds and money of the person borrowing, and subject to his control. The town has lost all power over the use and disposition of their loan” (Beck, 1966, p. 32).
While the prohibition of public funds in financing private firms remained intact, Maine found a way to bypass that restrictive interpretation when it confronted City Beautiful-era urban renewal and 1930s’ slum clearance and public housing eminent domain. A 1914 City of Portland bond to obtain land for and build city auditoriums (a City Beautiful initiative) was sustained as a legal use of tax dollars. In 1954 a Maine court supported eminent domain for removal of slums, yet declared in 1957 that a Bangor industrial development act which permitted a taking of land for the purpose of industrial development was unconstitutional.
The thread that underlies these decisions is that: public benefit or interest are not synonymous with public use, and that in a broad sense it is the right in the public to an actual use, and not to an incidental benefit [and so the public] … cannot use a plot of land leased to “x” Manufacturing Company. (Beck, 1966, p. 32)
Eminent domain for slum removal was separated from the narrow public purpose definition by linking eminent domain’s (urban renewal) public purpose to public safety and health:
The clearance of the “blighted area” in our view is the use of property for purposes of public health, morals, safety and welfare. The “public use” within the meaning of our constitution lies in the removal of breeding grounds of disease, juvenile delinquency, and other social evils. (Beck, 1966, p. 32)
Maine could do what it took to eliminate slums, but not to provide business and cost minimization programs to private enterprise.
As Richard Briffault later observed, the trend during the last half of the twentieth century was to devise ways to bypass narrow definitions and statute prohibitions against aid to business; but, clearly, some states were more willing and able than others—and the path taken by each state mattered in economic development. While the direction of change was shared, the timing and the bypass precedents retained much of the spirit contained in the original state constitutions.
PORT AUTHORITIES AND ONIONIZATION
Port authorities in 1945 presided over the entry and exit points for transformed postwar global trade/financial systems. Port authorities confronted the huge change in transportation, logistics technology, global trade patterns, international finance and competing infrastructure coming on line. They met the challenge. After WWII port authorities became superpower EDOs. Having achieved superpower status, port authorities started playing in their own league—becoming role models for our onionization and siloization professional dynamics. The following sections outline postwar port authority change to American state/sub-state economic development. Interwoven into our discussion are two objectives: (1) factors drove that growth and expanded functionality; and (2) how port authorities offer insight into the professional dynamics.
There are obvious factors/dynamics that prompted growth in postwar port authorities: for example, military needs and economic opportunities resulting from postwar US global leadership. As leader of the Free World and for more than a decade the only major economy whose infrastructure and economic system was not obliterated by the war, America came close to a monopoly in trade and finance. Bretton Woods set the dollar as the world’s reserve currency—the hegemon of the world economic and finance system. WWII required considerable shipbuilding infrastructure, naturally tied to America’s ports. The need for these facilities diminished, however, and after the war these facilities closed or were transferred to states/cities. Port authorities were the natural beneficiary of the new infrastructure.
Also, the question as to who would build/manage airports was timely. In most metro areas, it came down to an independent port authority or the city directly or through its own captive port authority. The federal government (the CAB and FAA) by the late 1950s almost compelled new airport construction to accommodate new (and louder) planes. The Supreme Court (1962) held airports liable for damage caused by noise (including diminished property value).14 So, by the end of the 1950s, most airport construction was outside Big City limits, favoring establishment of a port-like authority (Altshuler and Luberoff, 2003, pp. 128–36).
As for marine transportation facilities, the St. Lawrence Seaway, the world’s longest deep-draft navigation system, opened in 1959. The Seaway connected the Great Lakes directly to the Atlantic. Transportation of bulk commodities by sea was cheaper than land-based modes. That benefited Canada and marine transportation. The impact on railroads serving American Great Lakes cities, however, was horrendous. Cities whose economic bases centered on transshipment (Buffalo especially) were devastated; finished goods manufacturing and trade were rerouted to eastern seaports. On balance, the logistics impact disrupted American auto-based, finished goods industry sectors, destroyed their transshipment function and single-handedly began the long, sad trail of Great Lakes cities to their present chronically troubled status.
Predictably, Great Lakes states and communities responded by creating port authorities and devoting more attention and resources to their ports. Ohio (1955) enacted legislation which over the next several decades established both a sub-state (large cities, counties) Great Lakes port authority system and an internal, river-based port authority system. Locally controlled, these systems function to the present day and are significant elements in Ohio’s present-day ED system. Toledo-Lucas County (Ohio’s first), Illinois (Chicago) Port District, Waukegan and Oswego New York (1955), Indiana (1961), Erie PA (1962), Lorain Ohio (1964), Brown County (Green Bay WS, 1965), BuffaloNiagara Frontier (1967) and Cleveland (1968) were initiatives triggered in anticipation of or reaction to the Seaway.
The Intracoastal Waterway
The impact of the Intracoastal Waterway on state and sub-state economic development is little noticed, but it increased the number and functionality of port authorities along its route:
The Intracoastal Waterway, navigable toll-free shipping route, extending for about 3,000 miles along the Atlantic and Gulf of Mexico coasts … [accesses] sounds, bays, lagoons, rivers and canals and is usable in many portions by deep-draft vessels. The route is federally maintained [Corps of Engineers] and is connected to inland waterways in many places. It was originally planned to form a continuous channel from New York City to Brownsville, Texas, but the necessary canal link through northern Florida was never completed; hence, it is now in two separate sections—the Atlantic and the Gulf.15
The Intracoastal Waterway has a long history (Alperin, 1983), almost as long as the National Road. First proposed by Treasury Secretary Albert Gallatin in 1808, actual construction began in 1885 with dredging by the Florida Canal Company.16 From that time through World War II various portions were completed in spasms. World War II (protect coastal trade from German submarines) seriously accelerated construction in both sections of the Waterway. Today, the Atlantic Waterway south of Norfolk tends to be tourist/pleasure boat, small seaport/waterfront-oriented, but the Gulf Waterway is another matter entirely. Connecting Mississippi River inland waterways to Gulf industry centers, oil/chemical refining, oil/gas exploration/production and small business fishing, the Gulf section is heavily industrial/commercial.17
Texas took a leading interest in the Gulf Waterway, and by the 1920s key Texas coastal ports established port authorities that allowed minimally inland cities access to the Gulf. In the postwar, Beaumont (1949), Calhoun County Texas (1953), Port of Galveston (1940), Greater Baton Rouge (1952), Mississippi State Port Authority (Gulfport, 1960), Jackson County (Pascagoula, 1956), Port Arthur (1963) and South Louisiana Port Commission (1968) testify to the salience of both port authorities and the Intracoastal Waterway. In 1975 the state of Texas assumed responsibility for the Waterway’s main channel.
Despite its bias for tourist-related usage, the Atlantic Waterway also generated considerable port authority incorporation in 1970/80s’ Florida. The Cape Canaveral Port Authority (1939), Tampa-Hillsborough County (1945), Dade County (Miami) Seaport Department (1960) and Jacksonville (1963) demonstrate that international trade and intracoastal access prompted port authority formation. The early postwar incorporation of the South Carolina State Ports Authority (1942), Georgia Ports Authority (1945), North Carolina State Port Authority (1945), the State of Virginia Port Authority (1970) and the Maryland state Department of Port Administration (1971) are further testimony to the impact of postwar opportunities and their impact on port authority-based state and local ED. Georgia Port Authority vastly expanded its economic development role in 1994 with passage of the Business Expansion and Support Act (BEST) that enhanced the authority, authorized Joint Development Authority tax credits and expanded property and sales tax powers. Today this system of state port authorities is a formidable economic growth machine. South Carolina Port Authority in 2012 is credited with $45 billion in trade, for example, and Georgia Port Authority $67 billion.
“To Claim the Skies and the Seas”: New York–New Jersey Port Authority
Ironically, upon its incorporation in 1921 the two-state NY–NJ Port Authority (also PANYNJ) did not enjoy jurisdiction over the “ports” of New York or New Jersey.18 Its breakout came with the 1930 Holland Tunnel and 1931 George Washington Bridge (later Goethals and Bayonne). In 1937 it completed the Lincoln Tunnel. In Mayor La Guardia’s last year in office (1945), the authority took over two airports he had constructed (LaGuardia and Idlewild-Kennedy), later Newark (1948), Teterboro and recently Stewart. The Port Authority Bus Terminal (PABT) opened in 1950, moving into the Subway/light rail; and the NY–NJ took over the Hudson and Manhattan Railroad in 1962 and in its place established the PATH and Hudson Valley systems. A 1970 “deal” was engineered between the two states in which New York, inspired by David Rockefeller’s advocacy, empowered the port authority to revitalize southern Manhattan by clearing it and building the World Trade Center. On top of transportationrelated functions, the port authority evolved into a public real estate redeveloper/urban renewal agency. This baby has come a very long way indeed!
Somewhere in this checkered history, 1948 to be exact, the NY–NJ took over the Newark Port Authority. The heart and the soul of the authority’s marine and port legacy, however, are the ports of Newark and its Elizabeth container port—and part of the legacy is its innovation pioneered by the SS Ideal-X. An experiment, a container ship, supported by the newly rehabilitated Newark Port, the Ideal-X (developed by the McLean Trucking Company) departed the port in 1956. In 1962 NY–NJ Port Authority opened the world’s first dedicated container port, at its Elizabeth Port Authority Marine Terminal. That facility was, in 2013, the third largest port in the United States.19
In April 1956, a refitted Second World War tanker, the Ideal-X, sailed from Newark carrying 58 containers [to Houston] … It signaled the beginning of a revolution in global transportation, for at a time when it cost $5.83 per ton to load loose cargo … the cost of loading a ton onto the Ideal-X was $.15.8 cents. (Rybczynski, 2010, p. 119)
Containers are filled “at their point of origin” and shipped by truck or rail direct to the port dock and hauled up on ship by crane—the process is reversed at the destination port. There is no need for warehouses, just big parking lots and rail sidings to handle truck traffic, store containers and accommodate holding of inventory. The work is specialized and skilled, and the workforce gangs typical of On the Waterfront are drastically reduced. Access to rail switches and highways are “essentials” required for the 1960s’ cargo port. Older labor-surplus, land-locked and space-constrained pierbased harbors could neither meet these physical requirements nor accommodate the huge container ships that quickly followed. The ports themselves needed to be more accessible to the shipping routes of waterborne shipping.
As late as 1955, New Jersey announced that it was building the largest containerport in the country, and within five years, it was handling more than half of the region’s cargo. By 1970, New York City was down to only one-fiftieth of the tonnage it had a decade earlier, and most of the Manhattan and Brooklyn piers stood empty. The same cycle was repeated in other maritime cities. Oakland took the majority of shipping business from San Francisco, as did Seattle from Portland. … The old urban port of New Orleans, for example, now handles cruise ships; its freight function replaced by the sprawling Port of South Louisiana (fifty miles North of New Orleans, almost to Baton Rouge). (Rybczynski, 2010, pp. 119–20)
Not all older ports responded quickly or adequately to the container revolution. Philadelphia’s municipal port authority (a city department) was one of these. It was not until 1965 that, led by the Philadelphia Chamber of Commerce, the city joined with the State of Pennsylvania to form a new Philadelphia Port Commission (PPC).
The PPC oversaw the development of Philadelphia’s two container terminals, the Packer Avenue Marine Terminal [completed eleven years after the voyage of the Ideal-X] … in 1967, and the Tioga Marine Terminal … in 1972 … In 1978 the Philadelphia Department of Commerce released a study … the study concluded that [the two new container ports] … would reach container capacity by 1984.20
Philadelphia (not alone by any means) was slow in adjusting to containerization; the consequence was a less than perfect port—100 miles upstream and inland. Philadelphia lost its status as a first-order competitive port position. Instead, the Delaware River evolved into a 100-mile “marine highway” with more than 40 public and private port facilities. Philadelphia, 15th nationally in 2005, lost tonnage to other ports. It is also worth noting that northeastern and Great Lakes central cities lost important “golden era” functionality because of containerization. Innovation/productivity wreaks havoc on worker skills, jobs and the competitive urban hierarchy—it is not a one-way street to success.
Cast Adrift: Siloization and Onionization of Port Authorities
The NY–NJ explains why port authorities are no longer considered “mainstream” EDOs. Some became “transportation focused”; others concentrated on specialized infrastructure, marine operations and/or export–import marketing of their facilities. We are interested less in how the NY–NJ Port Authority “backed into” marine facilities, but rather that older port authorities became multi-functional. The NY–NJ Port Authority was/is multi-functionalism on steroids, but it was not uncommon in the postwar period for a port authority to be entrusted with non-port functions. Massport, for example, acquired responsibility for Logan Airport and the Tobin Bridge; a slew of other port authorities likewise drifted into airport operations.21 Smaller port authorities frequently assumed responsibility for marinas and for real estate development, redevelopment and various types of business parks. Other port authorities were empowered to operate facilities and programs designed to attract foreign trade, foreign direct investment and export and import. Other port authorities functioned chiefly in tourism and others became, in effect, community waterfront authorities.
As the scope of functions both expanded and/or contracted, becoming in either instance more specialized, port authorities “institutionalized.” They developed their own separate, picket-fence financing (and politics) and internal bureaucracies; hired on the basis of specialized skills pertinent to their functions; and, most critically, concentrated appropriately on the services and functions entrusted to them. In effect, larger port authorities similar to the NY–NJ Port Authority (those with airports) tended towards specialization in airport transportation and real estate redevelopment—other functions, like general economic development, may have gotten lost in the shuffle. Most critically, port authorities became deeply involved in the provision of services: running an airport, planning bus routes and the like. Service provision does not belong in economic development, and that confused both port authority staff and outside observers as to whether these were part of our policy area or deserved to be placed on their own. Whatever the merits of the decision, the consequences to the profession and policy area were considerable. Large blocks of pre-1945 economic development, transportation infrastructure and physical redevelopment, business attraction/ retention—and a slew of future ED initiatives—went with the port authority into our “onionization” limbo.
Also, specialization in function encourages the formation of “specialty” professional associations at both state and national level, and, in the case of port authorities, a North American organization: the American Association of Port Authorities. The identical process will later occur in regard to IDBs when in 1982 they formed the Council of Development Finance Agencies. Institutionalization usually leads to the development of a separate professional identity and a professional sub-autonomy with its own expertise, career path, picket-fence federalism and legislative/operational/public policy needs. As economic development matures in the next chapters, a pronounced tendency toward siloization by specialization in the profession appears; we are not starting down the trail of creating our patchwork profession. Siloization is a defining characteristic of contemporary American economic development, and port authorities in this period separate into their own silo. Onionization, the layering of period-specific EDOs within our jurisdictional policy systems, is more subtle, often, as will be discussed in later chapters, involving a redefinition of what constitutes “mainstream economic development.”
NOTES
- Tracey L. Farrigan and Amy K. Glasmeier, “Economic Development Administration: A Legislative History,” http://www.povertyinamerica.mit.edu/products/publications/eda_legislative_history.
- The Servicemen’s Readjustment Act.
- Wood’s daughter, Maggie Hassan, is 2016 Governor of New Hampshire.
- Victor Gruen, “father of the shopping mall,” believed regional shopping malls separated “utilitarian functions” (transportation) from human functions (shopping and entertainment) (Gruen, 1964, p. 190).
- Massachusetts Department of Labor and Industries, Census of Manufacturers in Massachusetts.
- The Massachusetts Association for Manufacturers opposed wage competition, believing it would increase unionization.
- In nine Dixie states during this period, mean weekly benefits were $15.55, with an average maximum duration of 16.9 weeks. Bay State benefits averaged $23.66 with 23 weeks’ duration. Massachusetts, the cheapest of the six New England states, had lower figures than New York and other Mid-Atlantic states (Koistinen, 2006, p. 331).
- The MBDC morphed into a New England-wide nonprofit SBA-certified lender. http://www.bdcnewengland.com.
- Kris Hudson and Anupreeta Das, “Mayoral Mission: Rescue Warren Buffett’s Bad Investment,” Wall Street Journal, December 2, 2013, p. 1.
- 297 Mass Acts and Resolves of 1954: “To Permit Economic Development of the Community.” The industrial development commission was legislatively formalized in 1961 (1961 Act Chap. 40, Section 8a) and amended in 1967.
- John F. Kennedy, “New England and the South,” Atlantic Monthly, January 1954.
- “Industrial Development Bond Financing: A Commission Report,” Advisory Commission on Intergovernmental Relations, Washington, June 1963, p. 15.
- Griggs v. Allegheny County, 369 U.S. 84.
- It actually starts in Boston, although its “official” milepost 0 is between Norfolk and Portsmouth VA. Encyclopaedia Britannica, “Intracoastal Waterway,” http://www.britannica.com/topic/Intracoastal-Waterway.
- The port of Norfolk Virginia claimed an 1805 dredged canal nearby was the initial construction.
- Federal involvement is credited principally to the Atlantic Deeper Waterways Association (which folded in 1947) and the Gulf Intracoastal Canal Association. Key pieces of legislation were the 1925 and 1942 Rivers and Harbors Acts.
- It was intended to stop the constant bickering and law suits over the harbor/harbor uses between the two states. Its first major initiative published a comprehensive plan aimed to rationalize the harbor and rail lines that fed into it.
- Post-1970s, the port authority acquired jurisdiction over the Howland Hook Marine Terminal, Brooklyn ASI Terminals and the Queens West Waterfront Development project.
- “Maritime Commerce in Greater Philadelphia: Assessing Industry Trends and Growth Opportunities for Delaware River Ports,” Report of Economy League of Greater Philadelphia, PIDC, Select Greater Philadelphia, Delaware Valley Regional Planning Commission and the Economic Development Research Group, July 2009, p. 13.
- Toledo-Lucas County, Puerto Rico, Bellingham Washington, Seattle, Grays Harbor, Olympia, Portland and Oakland. James A. Fawcett, “Port Governance and Privatization in the United States: Public Ownership and Private Operation,” Research in Transportation Economics, vol. 17 (2007), pp. 207–35, p. 230, Table 10.4.
Ron W. Coan 