Port Authorities: the Progressive ship sails into harbor
The Curmudgeon, always on the lookout for those phenomena which seems to make his “two ships” metaphor seem, if not relevant at least minimizes any perceived clumsiness, was happy, if not surprised, to discover the role of port authorities in the evolution of American economic development. Our discussion of Northeastern port cities in Chapter 2 skirted around the public port authority–observing that none were used in those jurisdictions and that their non-use was an exception to the larger national pattern. The unappreciated reality of early twentieth century economic development is that the formation and expanded use of public port authorities was an important, indeed major, step in the evolution of our profession and economic development practice. Public port authorities have largely dropped off the twenty-first century economic development radar screen, but interspersed among the great variety of contemporary economic development organizations can be found the surprisingly widespread, strategically powerful, but very little noticed dinosaur-like port authority[1].
Port authorities have an interesting past. Not surprisingly, much of the nineteenth century port facilities were privately-owned and de facto shipping monopolies of railroads, power utilities and mining corporations. Today’s public port authority is more than likely a quasi-public, state chartered, often locally driven public authority whose first priority is to service, of all things, a port (and often an airport). They are perceived by many economic developers as certainly economic development related, but not directly in the business of economic development and port authorities and airports, have their own professional associations[2] which operate outside the parameters of conventional economic development. In the Curmudgeon’s mindset, however, transportation infrastructure and trade functions are critical to the practice of economic development that the distinction and separation of these structural forms from the core of economic development practice seems quite arbitrary and a distortion. This mindset is reinforced in that most current port authorities include rather conventional economic development tools and programs. In a few states, port authorities to this day are a vital element of sub-state economic development , not to neglect that port authorities exist in every state SSS and in some states are a core EDO-type (see Oregon, Washington and Ohio for instance).
We shall in the next few pages suggest that public Port Authorities from their birth functioned as economic development agencies. And that the port authority was the first economic development-related structural expression of early Progressivism. As we shall quickly discover, however, as much as Progressives inspired and employed port authorities to achieve their purposes, Privatist-oriented economic development would also seize upon the EDO structure and adapt it to achieve Privatist ends as well[3]. In any case, using New Orleans and Portland Oregon as examples we shall demonstrate how early ports (and some port authorities as well) served as an initial battleground (with serious economic development relevance) in the Progressive pushback to private power and business monopolies.
Previous to the first decade of the twentieth century there were a few examples of a public port authority in operation. The most notable were those in San Francisco (1863) and New Orleans, the latter authorized by Louisiana state legislation in 1896. The former was a state commission and the latter was a state empowered, locally driven municipal level “authority” governed by “commissioners (appointed by the governor from local nominations of individuals “predominately identified with the commerce or business interest of the Port of New Orleans”)[4]. New Orleans as a port had by the turn of the twentieth century commenced its decline (in 1835 it was the world’s largest port and by 1900 it had fallen to be the United States’ twelfth largest port).
The decline prompted the private businesses which dominated the port (the New Orleans Steamship Association) to take corrective action. It was their leadership and political pressure, exercised through the New Orleans Board of Trade and Chamber of Commerce which prompted and secured the approval of empowerment state legislation. Essentially, in the New Orleans situation, Privatist elites turned to the state and governor for a quasi-governmental vehicle with which they could operate and manage a revitalization of the port’s business–while preserving private decision-making and protecting private assets (a” Big Easy elite–an informal business grouping)[5].
We believe that in these early years, this type of private domination of the port authority was also shared by the 1853 San Francisco Port Authority and the soon to be discussed (1891) Port of Portland[6]. Indeed, it appears that in this era, the ceding of semi-public power to business such as railroads was not restricted to the Western frontier and the transcontinental railroad.
If we conceive of the seaport as a modal shift point for cargo, the interest of railroads in seaports is quite logical. Important contemporary seaports such as the Port of Los Angeles had their genesis as freight entrepots and were originally creations of railroads. However, their influence at the waterfront–not to mention their ability to act monopolistically in cargo movement–eventually brought public condemnation and a call for reform.[7]
The “lock” over the appointment process detailed in the empowerment legislation, however, ensured that in New Orleans’s case, Privatist control was not effectively challenged for generations. Initially the New Orleans authority acquired privately owned jetties, wharves and piers and then was stymied; it was only in 1908 that the authority undertook dramatic projects financed by its first issuance of authority bonds. This delayed programmatic aggressiveness is interesting in that 1907-1911 was the period during which a virtual horde of newly created and specially empowered port authorities spread across the nation’s coasts[8] (except, of course, the Northeastern cities).
The truly remarkable emergence of the port authority as our first economic development agencies is vividly demonstrated by the events occurring within the older (1891) Port of Portland Oregon; The Port of Portland was created in 1891 to perform fairly limited duties and quickly became mired in an ever-constant series of scandals (which persisted through the first half century of its existence). By the turn of the century,
… many Portlanders worried that railroads and other private corporations held so much waterfront land that Portland’s competitive position … was being damaged. In 1910 the city’s voters approved $500,000 to acquire land for public docks. Mayor Joseph Simon, a political boss with obligations to the railroad, vetoed the council ordinance to sell the bonds. In response voters used the new initiative process to approve $2.5 million and create an independent Commission of Public Docks to break the railroad monopoly.[9]
The two co-existed, uneasily, alongside each other until they were consolidated into one port authority in 1970.
Oregon’s story does not stop here. Earlier, in 1909, the Oregon legislature approved a series of Progressive reforms which included, in an attempt to break the hold of railroad interests not only on Portland but the entire state as well. Included in this package of reforms was a single chapter (Chapter 777–Chapter 778 applied to the Portland) which stipulated a process by which many Oregon municipalities could create their own port authority. Also specified was the governance and the powers which these port authorities could exercise. Oregon’s coastal communities, empowered to create their own municipal port authority (with locally elected governance) immediately approved a series of local port authorities: Coos Bay (1909), Siuslaw Oregon (1909), Astoria Oregon (1910). Others were to follow and authorization was later extended to communities along Oregon’s major waterways. In 2013, the Oregon Public Ports Association asserts that twenty-three public port authorities exist and are currently operating in the state.
Just upstream, in the state of Washington, the story is much the same[10]. In Washington the public struggle between Progressives and Privatists focused around public ownership of port and transportation access and facilities. “In Seattle, Tacoma and elsewhere railroad companies had long controlled much of the urban waterfront as a result of concessions granted as cities competed to become railroad destinations”.[11] As early as 1907, the Governor (Mead) vetoed approved port authority legislation and attempts in 1909 were rebuffed as well. Every dog has his day, however, and in 1911 a series of Progressive reforms were approved by the Washington State legislature, included among them was the Port District Act.
The Port District Act, signed into effect by Governor Hay, empowered municipalities to create port authorities and directly elect their commissioners. “Progressives argued that public control (of harbor access and facilities) would permit coordinated development, financed by government-backed credit, and would ensure standardized rates and equal access to port facilities”[12]. Specifically, the port districts were authorized to acquire, construct, lease, and operate waterways, docks, wharves, and other harbor improvements, rail and water transfer and terminal facilities, and ferry systems. They were given power to levy taxes and (with voter approval) issues bonds, and exercise eminent domain. The three commissions of each port would be elected and the port authority itself would be independent of other governmental jurisdictions
Similar to Oregon, “only more so”, the port authority evolved to be the single most significant element of the state’s economic development effort. In 2013, there were ninety-five operating port authorities in Washington State–more than any other state. Washington’s two largest ports, Seattle and Tacoma are held to be the largest ports in the world with directly elected commissioners. Post 1940 state legislation would further empower Washington State port authorities to create industrial development districts and develop specific industrial sites, access to rail lines and to attract private industries. On top of this, state legislation authorized port authorities to embrace airports and airport-related activities.
All this was just the beginning of the era of port authorities. Port authorities were created along the Great Lakes. The City of Milwaukee as early as 1908 formed a Harbor Commission which led to city acquisition of land and construction of waterfront terminals. In 1914, the Wisconsin state legislature authorized the creation of the Port of Milwaukee. Albany (1925) and Duluth (1929) would follow in the 1920’s. California was a hotbed of port authority creation as well. As mentioned earlier, Los Angeles and Long Beach established their port authorities in the 1907-1909 period–other California municipalities followed suited through the 1920’s (Oakland, 1926, for example). Arguably, however, the crown jewel of the transition era ports authority movement was the New York-New Jersey Port Authority created de novo in 1921.
The trouble is the NY-NJ Port Authority just doesn’t quite live up to our very high standards. First, the New York and New Jersey Port Authority is not locally controlled and should not really be viewed as a sub-state EDO. It is an interstate compact. In addition, the title, port authority, back in 1921 was somewhat of a misnomer in that the NY-NJ Port Authority operated for more than twenty-five years before it acquired responsibility for any port or harbor related facilities. The NY-NJ Port Authority for its first quarter of a century was a transportation infrastructure authority which since 1948 has oozed itself into seaport functions and facilities. As a creature compatible with Progressive values, it fits pretty well, however.
To be sure, the Port Authority at the present time manages formidable port-harbor related facilities and programs; it is currently the largest port complex in Eastern United States. Its existence owes more to the federal Interstate Commerce Commission than to any Progressive effort to rescue the public interest from monopolistic private elites. Its birth flows from a Harbor Development Commission set up in 1917 as joint advisory bi-state entity, which was part of the solution to New Jersey’s 1916 law suit against New York. The lawsuit led to an ICC opinion directing the two states to play nicely in their shared sandbox, the Hudson River. While some economic development stories arising from “the Port Authority” will be picked up in a later chapter, suffice to say at this point is that port-waterfront facilities of the New York-New Jersey Port Authority are mostly located in New Jersey–not New York City. The Authority did not acquire control over the Port of New Jersey until 1948. Its New York City seaport related facilities were first obtained in 1985 (Staten Island Howland Hook Marine Terminal) after their 1973 acquisition by New York City and leased to the Authority in 1985. The second major New York City facility (Red Hook Container Terminal) arrived on the Port Authority’s doorstep in 2011.
The New York-New Jersey Port Authority raises the issue and question as to what degree we can treat a port authority solely as a Progressive instrumentality. The NY-NJ Port Authority certainly utilized an organizational structure that was compatible with its ownership and operation of key bi-state infrastructure, including eventually airports, maritime facilities, tunnels, bridges and God knows what else. The powers useful to accomplish these functions were readily available and incorporated into the port authority structure.
These powers and resources necessary for those activities accompanied and were incorporated into a port authority by at least two related, yet distinct factors. The first reason was that the 1908 Port of London Act (which itself had been kicking around for several years previously) was both an inspiration and an instruction manual for importation to the United States. Secondly, as we have seen in both the Oregon and Washington State models, the port authority amassed a quite extraordinary horde of public powers–including eminent domain, bond issuance, all sorts of real estate powers and resources, planning and taxation. All this in one package, located in a separate entity-jurisdiction from any sub-state general purpose unit of government, simply to our knowledge, did not exist previous to the 1910 era port authority. The combination of these powers into one EDO-like structure, therefore, became available for other future uses as well. As such, we will see modifications made to create structures suitable to issue industrial development bonds (1940’s), federal power agencies (TVA), and housing-urban renewal agencies in post-second world war era. In short, port authorities deserve inclusion into our history if, for no other reason, than the port authority EDO-type became a staple of economic development for the next one hundred years.
Ironically, Privatist communities and jurisdictions were attracted to a structure containing these powers and resources for their own reasons. A fascinating example of how the Progressive structure adapted itself to Privatist city-building ish activities is found in 1910 Houston, Texas. The formation of the Port Authority of Houston Texas (1910) combines city-building, with managerial privatism unleashed by the hurricane which devastated Galveston in 1900 (that storm as the reader will remember also prompted innovation in city governance in the form of the commission form of municipal government). That storm was the storm that built Houston into what we know today.
As of 1890, Houston Texas was home to about 27,000 fine folk and Houston was about forty-five miles inland from Galveston Texas. Galveston Texas was home to 29,000 equally fine folks in 1890. Connecting the two was a not very impressive, fairly shallow sliver of water called the Buffalo Bayou. Cargo from large ships would break bulk in Galveston onto barges and the barges would make their way inland on the Buffalo Bayou to Houston. Congressman from Houston (Tom Ball) wanted to convert that sliver of water into a shipping canal and make Houston a deep-water port–but he got nowhere, for at least ten years. And then the storm struck in 1900. Eight thousand Galvestonians lost their lives and much of the city was swept away.
Almost at the same time as the storm, oil was discovered, at Spindletop, Texas (near Beaumont) on January 10, 1901, and the opening shot of Texas Oil Boom was heard. Somehow Congressman Ball was able to persuade his House colleagues to fund fifty per cent of the cost of dredging Buffalo Bayou and making it a deepwater canal. All that was needed was the other fifty per cent (about $1.25 million). In 1909 the County formed the Harris County Houston Ship Canal Navigation District (seven words in the title–they do think big in Texas–it’s a port authority anyplace else).
A campaign was launched to convince voters to approve the port authority and a bond issue–and both were approved. On January, 1911 the Port Authority of Houston went into operation. It shortly after issued the bonds. But no one would buy the bonds. Jesse H. Jones[13], then a mere bank President, convinced each bank in Houston to ante up and the bonds were purchased. The canal was dredged and today in 2013 the Houston Port Authority is the top ranking United States port in terms of foreign tonnage and home to world’s second-largest petrochemical facility.
As Texas grew in no small measure to the Texas Oil Boom, Texas cities blossomed also and as they expanded, so did their need to acquire port access to the Gulf. Throughout the 1920’s additional port authorities were created in Brownsville (1925), Corpus Christi (1926), Post Isabel-San Freeport Texas (1927), Brazos River, (1927) and Benito Texas (1928). In 2013 sixteen Texas port authorities were operating. Lake Charles Louisiana also established its port authority in 1924. Also, the 1910 federal Rivers and Waters Act provided the first significant dose of federal funding for what would eventually be a 3,000 mile Intracoastal Waterway. Florida Port Authorities were not far behind as Palm Beach established theirs in 1915, St Lucie (1920) and Port Everglades (Broward County) Florida in 1927. The Tampa Port Commission, another city-building privatist endeavor was in operation by 1924.
This burst of port authority creation was only phase one of port authority history. We will see other bursts after World War II and especially during the 1960’s and 1970’s. Today there is literally hundreds of operating port authorities across the nation and yet their huge role and significant heritage within the conventional economic development profession is still little appreciated, but, for no other reason, the economic development structure which was pioneered by the port authority has proven to be the key structural vehicle for much of mainstream economic development.
If we combine our second chapter observations on the lack of port authorities with our present treatment of port authorities, we are struck by the variability of purpose-goals that port authorities were intended to achieve. The same structure with essentially same powers was used in the Pacific Northwest to challenge monopolistic pricing and access control by railroads and other harbor-logistics interests, while at exactly the same time, other communities are creating port authorities to “build cities” or to protect, if not enhance these very same harbor-and railroad interests. That the same EDO-structure can be used in the same time period to achieve varying, if not contradictory goals, is not shocking–probably not even surprising. But there is value in calling this reality to the reader’s attention. In future chapters new structures and programs will parade before our ever-glazed eyes, and the reader should not, perhaps never assume, that these programs are similar and uniformly implemented throughout the nation. In fact, the opposite is more likely the reality. Urban Renewal, EDZ, TIF, IRB and a whole assortment of other programs will evidence their own patterns of variability and pursue multiple goals. It is the variation and goal disparities that are to us more interesting and in constant need of explanation and understanding.
[1] A little background may be in order. First, the role and authority of the federal government while paramount in interstate commerce and foreign export trade (i.e. “what” can be traded and how “the what” may legally be traded) does not extend to the physical facilities of trade. The federal government has little legal control over the port facilities themselves. In fact, the facilities fall under the authority of states (or localities if delegated by the states) and hence the states are the primary regulator of the physical infrastructure associated with trade. Secondly, some ports are not managed by port authorities, even today (New Haven Connecticut for example) but by private corporations and subsidiaries of larger corporations. Some private port-related corporations are even foreign-owned and trade on foreign stock exchanges. Much of the physical infrastructure of trade remains in private hands to this day.
The reader, therefore, should be prepared to make the distinction between privately-owned port facilities and publicly regulated and presumably controlled port authorities. Perhaps more important, the reader should also be flexible and recognize (as we shall describe in later chapters) that the “port authority” has evolved into something more expansive than simple control over harbor and waterfront activities. Currently, many port authorities have expanded into airport management, intermodal centers and logistical empires. Most economic developers think of these behemoths as “transportation authorities”–and they are, but they are also formidable economic development agencies who often employ rather conventional economic development programs and strategies. Usually, port authorities (again, frequently including airports) today include a tax advantaged, foreign trade zone, industrial parks, and a tax abated incentive promotion program alongside its transshipment, break bulk and intermodal facilities (wharves, docks, railroads and warehouses).
[2] The American Association of Port Authorities was formed in 1912.
[3] EDOs we shall argue consistently in this history may draw their roots from either Privatism or Progressivism, but structures being essentially vehicles carrying programs and tools, can serve multiple, even contradictory, ends and goals.
[4] Brian Lloyd Azcona, “The Razing Tide of the Port of New Orleans: Power, Ideology, Economic Growth and the Destruction of the Community”, Social Thought and Research, Volume 27, www.kuscholarworks.ku.edu, p.80
[5] Brian Lloyd Azcona, “The Razing Tide of the Port of New Orleans: Power, Ideology, Economic Growth and the Destruction of the Community”, Social Thought and Research, Volume 27, http://www.kuscholarworks.ku.edu
[6] As support we cite the “Port of Portland” Oregon Encyclopedia, “The first board of fifteen commissioners appointed by the (state) legislature, represented the Portland business elite, with William S. Ladd as the first commission President.
[7] James A. Fawcett, “Port Governance and Privatization in the United States: Public Ownership and Private Operation, Chapter 10, Research in Transportation Economics, Volume 17, 2007, p. 211.
[8] For example, we shall focus attention upon the Oregon Port Law of 1909, the Milwaukee, Wisconsin Port Authority (1909) and the Washington State Port District Act of 1911. Long Beach and Los Angeles, as well as Houston, Texas were other port authorities formed in that four year period. There were others as well.
[9] “Port of Portland”, Oregon Encyclopedia, op. cit. p. 1.
[10] Some examples are: Seattle (1911), Grays Harbor (1911), Vancouver Washington (1912), Tacoma (1918), Bellingham (1920), Everett Washington (1917), Kalama Washington (1921), Longville Washington (1921), Olympia (1922), Longville Washington (1922), Anacortes Washington (1926)
[11] WWW.HistoryLink.org — the Free Online Encyclopedia of Washington State History.
[12] IBID. p. 2 A Progressive leader in port legislation was Virgil G. Bogue who would later draft waterfront plans for Seattle and Grays Harbor and Tacoma. His motivation was to create coordinated public ownership “as practiced by European ports”.
[13] Jesse H. Jones, later allegedly called “Jesus H. Jones” by FDR turned down several offers by Wilson to be in his administration. He headed the Reconstruction Finance Corporation (for Hoover) and later became FDR’s Secretary of Commerce. He was seriously considered for the 1940 Vice Presidential nomination. His PAC, the Suite 8F Group, contributed mightily to political careers of folk such as John Connolly and Lyndon Baines Johnson.
Ron W. Coan 