BIG CITY “FIRST WAVE” CHAMBERS
Ted K. Bradshaw and Edward J. Blakely in their seminal article on ED “waves” assert that: The first wave was dominated by programs designed specifically to attract footloose firms from old industrial areas to growing regions such as the South or West. The typical tools of the first wave were subsidized loans or direct payments to firms for relocation expenses, tax reductions, subsidies applied to the cost of plant facilities or utilities, and competitive and expensive industrial recruitment programs. (Bradshaw and Blakely, 1999, p. 230)
This history strongly asserts that this conception of our profession’s/policy area first historical period is at best an abridged synopsis of what actually happened in the pre-World War II years.
What’s Left Out
By no means do we deny that “subsidized loans, tax reductions, site assistance and competitive industrial recruitment programs” were characteristic of these periods—we have gone to considerable lengths to demonstrate they were. Also, I have persistently argued that concern with competitive urban hierarchy prompted chamber-led economic developers to provide subsidies and ED assistance to “footloose” as well as existing expanding industries. Our criticism is that First Wave conceptions isolate one element of First Wave sub-state economic development—and ignore the great majority of ED strategies/initiatives carried out in these years. Moreover, the implied attraction aggressiveness borrows more from southern and western chambers—ignoring that hegemonic northern and midwestern chambers had little to attract from other regions considering most prospects were their branch facilities. Also, early community development strategies are completely ignored, even when pursued by Big City chambers.
Although we are less than midway through the Progressive Era—decades from the 1920s and Depression years which are also considered First Wave—it is obvious to me at least that the predominant economic development strategy in northern and midwestern Big Cities was infrastructure, particularly transportation infrastructure. The next chapter includes the City Beautiful movement, the “golden age” of CBD physical development. Shortly in this chapter, the aggressive leadership of chambers in the development of municipal, Big City policy systems through structural reforms may arguably be chambers’ most important contribution to modern economic development policy in this period.
There is more to First Wave economic development as a profession or policy area than a single-minded pursuit of attracting footloose firms with expensive subsidies and recruitment programs. Chambers and their industrial bureaus were important, but not primary chamber economic development initiatives. That’s why they were spun off to industrial and tourism bureaus. Indeed, as we describe industrial bureau practice in the paragraphs that follow, tax abatement was as pervasive then as it is today; but most industrial bureau initiatives were privately funded. First Wave government-financed loan funds and industrial recruitment programs were so rare as to be non-existent.
Ranting aside, did chambers consistently employ business attraction programs, work with government to develop incentives and extensively market/advertise their community? Yes! Using Sturges’s history of Progressive Age chambers, a more detailed and robust description of those programs is provided below.
Sturges and His First Wave
Sturges begins his description of Progressive Era chamber business attraction (called civic advertising at the time) by explaining its underlying mentality and motivation:
A mighty competition between cities is resulting from the growth and influence of commercial organizations in this country … . The board of trade … may be tremendously significant[ly] [responsible]. The board of trade has been termed the city’s garrison, ever alert to sense changing conditions or important movements by other trade centers, and faithful in building up and preserving the commercial strength of the city. (Sturges, 1915, p. 231)
He continues, asserting that:
Publicity is an important element in intercity competition … Many boards of trade send out pamphlets and illustrated booklets displaying local industrial and civic advantages. The most notable achievement in advertising of this sort is the volume New England: What It Is and What It Is to Be, circulated in 1911 by the Boston Chamber of Commerce. (p. 232; internal citation omitted)
Sturges also describes Milwaukee (1913), Year Book of the Milwaukee Merchants and Manufacturers Association, and cites Cincinnati chamber’s industrial department as having surveyed industry in the city and “furnished data regarding the cost of raw materials, freight rates, limits of natural markets, and the cost and availability of labor.” He further provides a robust set of footnotes 22 assisting readers in finding out how civic advertising is best accomplished (Sturges, 1915, pp. 231–4).
[b]ut as a general thing, industrial development involves the element of competition between cities. Going concerns remove from one place to another in order to obtain increased facilities for transportation or production, or because the new location offers better living conditions … . Most chambers of commerce maintain industrial bureaus for the purpose of discovering contemplated removals and securing a first hearing for the advantages of their respective cities. A recent government report criticized the practice of bidding for industrial concerns and offering large bonuses and other material inducements. The first duty [however] of a chamber of commerce is to the local enterprises; by making them healthy the community will be better off in times of business depression. (Sturges, 1915, pp. 234–5; internal citation omitted)
Sturges deplores the practice of bonuses (he prefers business retention), and details the New York City Merchants Association horror at the practice. But he further describes the “Williamsport Plan” for financing industries, followed most notably by the Boston chamber. The Boston chamber, he notes, organized its industrial bureau around the Williamsport Plan. That plan draws from a loan fund raised by community subscribers (a sort of business crowdfunding):
[It] guarantees on a security of a credit fund the notes of men with enterprises to establish, who have been previously recommended by the chamber … . The liability of each subscriber to the credit fund … is limited to the amount of his guarantee, and all losses are distributed pro rata. (Sturges, 1915, pp. 236–7)
Subscribers committed to $300,000 apiece and funded $50,000 immediately. The remainder was provided as needed. This is a fairly sophisticated loan/guarantee fund, and was locally and privately raised. Public funds were not involved. The pioneer was Williamsport PA (about 30,000). The plan, referenced in the Fifth Annual Proceedings of Commercial Secretaries (1915), reported a number of cities had copied it—Williamsport itself abandoned the plan in 1914.
The Fifth Annual Proceedings of Commercial Secretaries issued a survey of chambers; and, while the response can only be described as horrible, 10 percent of chambers indicated that their industrial bureaus operated “housing” (a building) suitable for industrial tenants. About 20 percent said they did have “sites” available and of those reporting yes, 140 firms had been relocated over the past three years (an average of ten per community). More communities responded in the affirmative to their provision of “free sites” to a relocating firm—meaning they would find a site and make it available to fit a visible and viable prospect. About 10 percent provided cash bonuses. Several communities, including Cumberland Maryland, were cited in descriptions of specific projects involving cash bonuses. Business retention activities were more basic, ad hoc and far less prevalent than attraction (Millener, 1915).
As to conventions, obviously a Big City program, Sturges comments:
Much competition arises between rival cities to secure the conventions of associations and societies which annually are held in the United States to the number of over 18,000 … The majority of commercial bodies [chambers/boards of trade], through their convention boards or committees, endeavor to bring conventions to their respective cities. (Sturges, 1915, p. 238; internal citation omitted) Sturges acknowledged that subsidies characterize tourism attraction program as well as industrial attraction—providing a comment from Ritchie that he recruits conventions but prefers to attract manufacturing corporations, because their multiplier is higher. Sturges suggests competition among cities for conventions is intense and that collateral material and physical “campaigning” is pervasive among chambers—although he again discourages “bonus-giving” (Sturges, 1915, pp. 238–40).
Wrap Up
Thus there can be no doubt that business attraction, incentives and marketing were typical of Progressive Age chambers/boards of trade. Attraction programs were pervasive and, while sophisticated, likely uneven in their execution. Conventions were also important in this era. Bonuses and financial/property incentives were common but controversial, even in these years. The average chamber probably was not able to offer very much, as the funds involved came not from government but from business itself. The Williamsport Plan was sophisticated, and many chambers developed loan portfolios. As a description of industrial bureau programs, conventional First Wave conceptions of their activities are a good start only.23
Ron W. Coan 