Gilded Age Big City Municipal Economic Development
Denny Tag suggests that 1888 businessmen saw boards of trade as the place to go. Nineteenth-century Big City chambers may not have been the place small business went to for assistance. Sturges’s chamber history (1915) revealed in 1858 only ten active chambers and 20 boards of trade. The chamber/board of trade explosion was a post-Civil War event. Sturges cited an 1898 national inventory of sub-state business organizations that uncovered 2930 local business organizations. A breakdown of these organizations revealed that 414 were chambers, 490 boards of trade and 838 commercial clubs and associations. Chambers only made up 14 percent.
Commercial clubs, supposedly much less involved in civic affairs, handled intrabusiness disputes; chambers, full of Big Cheeses, were heavily involved in larger civic issues/city reform; and boards of trade, populated by community-level commercial and manufacturing owners, may have dealt with medium and smaller businesses. Boards of trade were most characteristic of northern states; South Atlantic states gave a slight advantage to chambers; north/south central states were overwhelmingly “commercial clubs”; and western states were split equally between chambers and commercial clubs (Sturges, 1915, pp. 46–8). Regional variation is evident, suggesting that similar organizational types cannot be assumed as identical in function or activities across cities and regions.
Sturges states that commercial organizations improved “relations between transportation companies and the commercial interests … freight claims.” Boards of trade kept local merchants informed of foreign trade; arbitrated commercial/exchange disputes; were active in fire/accident prevention; made industrial investigations; and analyzed “the needs and advantages of their cities, and planning to acquire new factories and industries” (Sturges, 1915, pp. 49–50). Big Cities offered choices in business organizations, and a division of labor likely emerged. No comprehensive study of boards of trade exists, but I suspect they played an important role in Gilded Age ED company-level strategies and programs. Chambers captured the research and visibility. Certainly, Big City chambers advocated, lobbied and participated intensely in Big City jurisdictional political and policy processes. Possessing considerable muscle as close allies of the increasingly powerful businessman mayor, chambers advocated the formation of independent government boards and commissions whose decision-making they dominated. Chambers were heavily involved in economic development administration. A typical example is Milwaukee.
Organized in 1861 or 1869, in 1869 the Milwaukee chamber raised a special fund of $869 “to promote the city’s industrial growth.”8 In 1871 the Milwaukee Chamber published a collateral piece describing the city’s advantages for location of trade and industry and circulated it externally. The Milwaukee Chamber (1881) constructed and held its “Industrial Exposition”—a building costing $300,000, patterned after Philadelphia’s Centennial Exposition—to advertise “made in Milwaukee” innovations/products. Chambers, media, tourists and businessmen from other cities hustled to Milwaukee to check it out. The exposition developed into a rage as chambers in St. Louis, Chicago and Minneapolis imitated Milwaukee’s economic development innovation. Milwaukee perceived itself on a roll. In 1888 it formed a private Association for the Advancement of Milwaukee, whose program included urging the city’s real estate firms to offer free sites or free rent to new industrial ventures, and it collected subscriptions (donations to subsidize relocating firms) from the business community to fund its endeavors (McKelvey, 1963, pp. 43–4).
Exposition Fever9
Milwaukee’s inspiration for its exposition was the 1876 Philadelphia Centennial International Exposition, the first “World’s Fair” held in the United States. The centennial was touted as demonstrating America’s contribution to technology, agriculture and the machine. An estimated 10 million people attended the six-month event. The prime mover behind the Philadelphia Centennial was not its chamber but a motley combination of wealthy businessmen, the Republican state and local machines/city council, and the Franklin Institute. The idea originated from a Wabash College academic. The state machine secured permission from the national government in 1870 to represent the USA, and international approval followed. A Centennial Commission ran the affair.
Funding was a permanent problem; it eventually defaulted. The site and the infrastructure associated with the World’s Fair were formidable—a small bit remains to this day. The World’s Fair, functionally equivalent to the Olympics in the twenty-first century, was meant to be an economic development initiative. A number of innovative products were displayed at the exposition, including Alexander Graham Bell’s telephone (for the first time in public), Heinz Ketchup; and, of all things, it introduced kudzu as an erosion control innovation. On a positive note, a convention of librarians held at the centennial approved incorporation of the American Library Association. The centennial also spawned local historical societies that developed city histories.
Expositions, by their nature, were never pure chamber efforts; but, Philadelphia aside, chambers were lead players in the main. Each followed a theme larger than the community hosting the event, a theme that fit into the city’s image of itself. These were innovation-oriented affairs: the products and message were underscored by cutting-edge machines, technology, science and gadgets. Most involved construction of a “campus” with architecture and design prominent elements. As seen in Philadelphia, arts, education, literature and libraries took advantage of the occasion. Larger expos were also successful tourist events; in preparation, each host city “spruced up” and, in several instances, held “preparatory” events. City institutions and elites learned how to work with each other. Now mere words in a history book, expositions were emotional experiences—the city declaring itself a major place in the emerging American urban hierarchy. Expositions were physical expressions of civic patriotism, etched into the memories of residents and their families for years after.
In 1894 Philadelphia returned the favor and copied Milwaukee. Philadelphia’s city council built a “Commercial Museum” that displayed the area’s products, and developed collateral material to support its path-breaking foreign trade strategy. Forming an international advisory board, the museum’s purpose was to develop export trade by supplying manufacturers with commercial information and statistics—and product displays at the museum. This is a prototype World Trade Center. The city, working with the University of Pennsylvania and with money raised by business, opened the exposition in 1899, hosting a commercial congress attended by delegates from most of the world’s major countries—a reverse trade mission (Sturges, 1915, pp. 73–5). In short order, San Francisco, St. Louis and Boston built similar museums (McKelvey, 1963, p. 43).
Expositions continued into the Progressive Age. The Buffalo 1901 World’s Fair was by far the largest, but smaller exhibitions such as Boston’s 1913 Chamber Industrial Exposition marketed New England-based products and manufacturers. For that event the chamber published New England: What It Is and What It Is to Be (French, 1911).
Attraction and Promotion
The infamous “boosterism” said to characterize chambers is most accurate for western and southern chambers. The booster attraction and promotion campaigns in the North and Midwest mostly originated from railroads, boards of trade and separate tourism agencies, rather than pre-1900 Big City chambers.
The chamber approach to economic development, aside from infrastructure, was distinguished by its focus on marketing and advertising, which were essential strategies for corporate survival and growth. This is the core of chamber boosterism. To chamber leadership and staff, expanding the community’s base of firms, adding manufacturing firms in particular, was the natural strategy to grow the community and ensure its ability to compete in a world in which communities competed for residents, firms and exports. New York City and “windy” Chicago competition was real; nearly every Big City, like today’s hometown sports team, had a rival.
As to technique, Gilded Age chambers were sophisticated. Business surveys seemed common, and a consultant industry developed to develop/administer them. Surveys produced a prospect database; chambers devised a manual prospect management system. A sense of the proper municipal business climate had also evolved, and that was played up in promotional literature. Community advertising campaigns were common and research/data, based on the census, evident. Direct mail and the use of radio were also evident by the tail end of the nineteenth century. Chamber attraction programs were not “amateur hour.” How collateral material got to the prospect is less clear. Railroads no doubt played a role, as did advertising in newspapers and magazines. Regional variations in chamber promotion were huge; western and southern chambers were more aggressive and, pound for pound, appear more successful. Eastern and midwestern chambers did not recruit from western and southern communities because there was very little to steal in these newly forming economic bases. Instead, they advertised in fellow Big Cities. Most communities played by the informal Victorian-era rules. That changed when southern jurisdictions visited Big City firms— that was not how the game was supposed to be played.
Throughout the late nineteenth century … promotion of cities in the South and West was largely the result of individual initiative, drive and profit-seeking. Urban land speculation was limited in the already established cities of the East and Midwest. (Mohl, 1985, p. 73)
The real estate focus of these early recruitment efforts strongly suggests that sites were either identified or actually created. Financing for real estate, not machinery, was supplied by member banks and informal, Denny Tag-like investor groups. I strongly suspect that actual sites were informally located by chamber members, and that the process, if carried out today, would generate a New York Times series and thousands of critical academic articles. Chamber real estate activities were undoubtedly played “close to the vest”—insider, favorites-based and profitable for those able to tap into chamber projects. More or less informal, site selector consultants operated at the time. The Baltimore Manufacturers Record had been established in 1883, but that industry did not truly take off until the 1950s when Conway became prominent.
Tourism
Turn-of-the-century tourism promotion employs tools and techniques discussed thus far—privately designed and financed. Railroads were in charge. They financed and distributed media advertising, posters and collateral material of the age. Nineteenth century tourism promotion centered on resorts that sprung up along the Atlantic Coast. Seaside resorts were initially popular in Britain, where they enjoy a long history. During the Gilded Age, British and European upper classes flocked to America’s seaside resort cities. Newport (for the truly rich), Nantucket, Martha’s Vineyard, Cape May New Jersey and Atlantic City attracted clusters of resorts, hotels and mansions. Adjacent as most were to big Eastern cities, these resorts were ideal for the middle, but especially for the upper class to get away from the hot, smelly city during the summer. The connection between Big City and seaside resort was the railroad. The queen of seaside resorts was indisputably Atlantic City: “Atlantic City, before the emergence of Florida, or Las Vegas or southern California as mass holiday locations, undoubtedly dominated American tourism” (Ward, 1998, p. 41).
By1909 Atlantic City had become the world’s most visited resort (overtaking Britain’s Blackpool), attracting 8 million visitors. Founded in 1854, Atlantic City was a classic East Coast example of railroad land speculation and city-building. The idea of Atlantic City as a health resort is credited to Dr. Joseph Pitney, “the father of Atlantic City,” who was partnered with affluent and well-connected business entrepreneur Samuel Richards (Johnson, 2010). Atlantic City, favored by a location crisscrossed with multiple railroads, owed its existence and fate to no railroad monopoly. A government and business/tourist partnership operated promotional campaigns independent from the railroads as early as the 1870s. Hoteliers raised funds for advertising campaigns, and in 1870 America’s first “boardwalk” opened up (piers followed, including the famous 1898 Steel Pier in Atlantic City).
Atlantic City’s dominance was no accident. It always blazed its own path, separating itself from other seaside resort cities (branding, dare we say). In 1906 the Atlantic City Publicity Bureau—a joint venture of its Board of Trade, Hotel Men’s Association and Business League—came into existence. The Publicity Bureau lost no time in branding Atlantic City as “America’s Greatest Resort.” Lest we exaggerate, the Bureau was never solely responsible for the hordes who vacationed at the “playground of the world.” Railroads, steamships and even trolley lines joined in heartily. Local travel bureaus flourished in America’s Big Cities due to Atlantic City. Tourism promotion was never limited to coastal resorts. It was a core economic development strategy in most Big Cities during the Gilded Age; tourism usually came in the form of a convention.
Indianapolis is the first documented convention-related activity by a Big City chamber/board of trade (Mead, 2014, p. 132). In a letter from Eli Lily in 1892 to the CEO of the Indianapolis Commercial Club (founded by Lily in 1890, Lily gushed his congratulations for the Commercial Club’s successful recruitment of the Grand Army of the Republic (GAR) convention of that year. Lily himself was chair of the 1893 GAR, so I suspect he helped things along. Apparently, over 300,000 visitors poured into Indianapolis, and the financial surplus generated by the convention allowed the Commercial Club to fund what Mead believes was the first permanent Convention and Visitors Bureau. I would not be shocked, however, if chambers, boards of trade and commercial clubs had been involved in tourism and conventions a decade or more earlier.
Tax Abatement and Deal-Making
Chambers didn’t invent tax abatement, and the reader shouldn’t assume that chambers connived to wheedle abatement from an unwilling government—municipal and state governments knew that tax abatement is what they brought to the deal. Chambers were likely more adverse to abatement in that their members paid taxes without abatement. Chambers, however, were also sensitive to the dangers of competing communities. So tax abatement, although not built into deal-making as it is today, became more likely when a relocating firm was perceived to have mobility opportunities—or was needed to fill some perceived need. Other tax exemptions were meant to startup a company: they burned off after a period of years; still others were based on the perceived need to compete for firms from other states—the inspiration for abatement was, at the least, formally authorized by the state. States/localities gravitated to “targeted incentives.” An example would be New York’s 1880 abatement of capital stock tax to, among others, “manufacturing corporations carrying on manufacture within the state.” The reason New York is cited for this abatement was “the desire on the part of the State to bring within its borders the advantages which attend the maintaining of large manufacturing establishments and the employment of many men therein.” Pennsylvania, presumably losing firms to New York, copied this legislation in 1885. The Pennsylvania Supreme Court legitimized the legislation, its rationale being that:
laws had been made in adjoining states which gave encouragement to the establishment of factories by exempting them from certain forms of taxation. The mischief to be remedied was the danger that such legislation might lead to the removal of capital and labor from this state to others, to the detriment of the business and the prosperity of our own.10
The topic of wars between the states caused by tax abatements and incentives will periodically appear in several future chapters. But it should be clear at the outset that competition with neighboring states was the principal trigger for tax abatement in the nineteenth and early twentieth century. Tax abatement in those years was in no significant way prodded by southern aggression or textile wars. A study of abatement for the nineteenth century has yet to be attempted.
Ron W. Coan 