Chapter 2 Chicago C-B
The ICRR model was in essence government contracting with a private corporation to devise and manage its core economic development strategies. The railroad was given access to the necessary tools (land grants, tax abatement, eminent domain, public financing), and then left to its own devices. The railroad recruited through sophisticated promotional programs, city-building followed. Privatist to its core, the ICRR program achieved spectacular success in filling up the Illinois countryside
Big City-Building
McDonald (McDonald, 2008, p. 6) posits two factors that combined to create America’s first cities: the invention of large scale production methods and the transportation revolution.
Factories with economies of scale were developed in several industries–textiles, apparel, iron, tools, ordnance, wagons, lumber, and food products such as flour and so on. The transportation revolution (on the other hand) was first based on the steamboat, and a few years later, the railroad. Production to build the railroads and companies to run them became major parts of the economy. These two factors made it economical to house large manufacturing enterprises at the transshipment points.
Sounds great to any budding economist, but something was missing—the entrepreneur that could make it happen. So we must add to the mix those individuals who actually put the drivers of growth together: the city-builders. In some quarters of the profession city-builders are viewed as extremely questionable characters, with an exceedingly dark side. To them city-builders are greedy SOB’s seeking personal profit. Nineteenth century city-building, it is often alleged, was engineered by businessman who made a fortune hawking land and lots, often acquired by bribing state or territorial governments, and sold to down trodden masses (mostly pioneers and immigrants). Toss in railroads and robber barons and the picture is pretty dismal—or conventionally capitalist which is synonymous with dismal. All told, it is not too far from the truth—except that maybe there is another way to look at it.
My king of early nineteenth century city-builders is Chicago’s William B. Ogden (Boorstin, 1967). To be sure, Ogden is … how do we say it? Complicated! But interweaving McDonald’s model with Ogden’s activities we can reconstruct American city-building most fantastic success: Chicago. The original sin of Privatist city-building is that it is unplanned and capitalistic. Chicago’s 1830 population (0) presented an opportunity to plat grids, install infrastructure, develop advertising hoopla, and by hook or crook attract businesses and residents—making in the process a personal fortune. Here’s how it happened.
Chicago, initially a seventeenth century fort, took off after the Black Hawk War (1832). Glenn Hubbard, a trader with the American Fur Company, arrived and then recruited a number of entrepreneurs/ businessmen from Western New York to plat and market the area to settlers. Included among Hubbard’s early transplants was a lawyer from Delaware County New York, William B. Ogden. Hubbard’s team was helped greatly by Chicago’s first innovation, balloon frame housing construction devised by New Hampshire-born George Washington Snow in 1832. Snow transported Michigan logs to the treeless plains of Chicago, fashioned them into Chicago’s first industry sector: housing construction. Balloon frame construction minimized lumber and construction time, resulting in an affordable, quality product that attracted new settlers. By the decade’s end the fledgling settlement grew to about 4,000. More was needed to achieve “take-off”, however. This is where Ogden came in.
It really helped if the prospective resident could get to Chicago easily–which meant transportation infrastructure was king. So McDonald was at least half-right. Someone had to install/finance the transportation infrastructure, however. That was Ogden. Ogden, elected as Chicago’s first mayor in 1836, persuaded the federal government to build piers on Lake Michigan at the mouth of the Chicago River where Ogden had conveniently established a marine shipping company with routes to Buffalo. Next, Ogden connived with East Coast investors to convince the state of Michigan into building the Illinois and Michigan Canal—this canal opened up Chicago’s hinterland and Ogden soon had grain to ship to New York. On return, the ships brought back new settlers to Chicago.
Ogden put his money where his mouth was, and personally provided funds needed to build present day Archer Avenue. He then subdivided and marketed the Bridgeport neighborhood (Mayor Daley’s future home). Recognizing, without a plan or an economic textbook that he had to also provide jobs through industry, Ogden then set about stealing somebody else’s sectors and jobs. Today we call it business recruitment. Ogden in 1845 saw potential in Cyrus McCormick’s mechanical reaper. The reaper, invented in Virginia (1831), was first manufactured in Cincinnati where it caught Ogden’s attention. McCormick was recruited with financing from Mayor Ogden to Chicago in 1847 (Barone, 2013, p. 71). Ogden thoughtfully tossed in tax abatement and a site into the McCormick’s incentive package. In following years, Ogden, in true Yankee style, also founded the Chicago Lyceum, Chicago Historical Society, Chicago Orphans Society, the first University of Chicago, and Northwestern University.
Ogden’s Privatist city-building efforts mushroomed Chicago’s population, 4,000 in 1840, to 112,000 by 1860. In 1870, Chicago was the nation’s fifth largest city (299,000), on its way to become the nation’s second largest city (1.1 million) by 1890. Ogden, sadly, lost much of his wealth in the Great Chicago Fire of 1871 and with all the irony imaginable, he moved to New York City where he died (and is buried) in 1877. The Great Fire and Ogden’s departure, however, did nothing to stop Chicago’s explosive Gilded Age growth. At the turn of the century, Chicago was home to a wee bit less than 1.7 million residents. Jon Teaford glorifies the city-building success that was Chicago:
In 1830 Chicago was a frontier trading post with a few log structures, a few muddy paths, and a few dozen inhabitants. Seventy years later it was a city of 1.5 million people, with a waterworks pumping 500 million gallons of water [daily] … and a drainage system with over 1,500 miles of sewers. More than 1,400 miles of paved streets lighted by 38,000 street lamps … and 925 miles of streetcar lines carried hundreds of millions of passengers each year … over 2,200 acres of city parkland, and a public library of over 300,000 volumes …. In a single lifetime Chicago residents had transformed a prairie bog into one of the greatest cities of the world. (Teaford, 1984, p. 217)
Ron W. Coan 