Northern Infrastructure: Not-Friends with Benefits
As late as 1880, east of the Mississippi South had installed only 13,250 miles of rail. In the decade that followed that exploded by 108 percent to 27,600 miles. Texas, Arkansas and Louisiana (west of the Mississippi) increased trackage by over 211 percent in the same decade. Over 180 southern railroad companies were established as well. About $150 million was invested in southern railroads between 1879 and 1881 alone. By 1882 New Orleans was finally linked by rail to San Francisco. By 1890, however, half of the southern railroad mileage was controlled by a dozen northern-owned companies. In the Panic of 1893, banker J.P. Morgan got the rest (Woodward, 1981, p. 120).
Colonization was not without its benefits. Northern investment functioned as a bulldozer, removing obstacles to change by the sheer power of money and organization. For example, a critical weakness of southern railroads was its 3-inch differential in gauge (width of track) of its rails compared to northern railroads. Shipments across regions meant breaking bulk and transferring goods to different trains. All 13,000 miles needed to be replaced with correct gauge rail. Starting at dawn on May 30, 1886, an initial 2000-mile section was replaced by 8500 workers in 16 hours; that same day the same workers adjusted 300 locomotives and 10,000 pieces of rolling stock (Woodward, 1981, pp. 123–4).
The same could be said for the iron, steel and coal industries. In 1879 Northern and English syndicates invested in the Tennessee and Virginia mines and furnaces. A decade earlier, the same railroad which had adjusted its gauge (the Louisville and Nashville) had invested in central Alabama mines, and had begun laying tracks and connecting lines to get coal to urban centers under speculative development. Birmingham, Ensley, Bessemer, Helena, Aniston and Talladega Alabama sprang up; by 1887, 32 furnaces, a $30 million investment, were in operation. Alabama steel production increased over that decade by 1000 percent:
By the late eighties, the South was producing far more pig iron than the nation produced before the war; investment in blast furnaces was mounting faster than any northern state; and between 1876 and 1901 pig-iron production increased seventeen times in the South and only eight times in the country at large. (Woodward, 1981, pp. 126–8)
Northern corporations controlled the South’s manufacturing output; they imposed the well-known Pittsburgh Plus steel pricing. That price system worked to the South’s disadvantage. If there was a silver lining, the North consumed steel and raw commodities the South produced through World War II. During those years a low-wage southern (mostly white) proletariat acquired industrial experience. Between 1869 and 1899 the 11 Confederate states annually increased real value-added manufacturing by 7.8 percent compared to 5.8 percent nationally; and between 1899 and 1929, the South grew 5 percent versus 4.4 percent nationally (Wright, 1986, p. 61, Tables 3–5). The South was slowly industrializing. But, in 1860, the South possessed 17 percent of the nation’s manufacturing firms; by 1904 that had fallen to 15 percent (Woodward, 1981, p. 140). The “industrial” gap between North and South had not closed at all, despite significant investment in southern manufacturing.
Industrialization was slow and incomplete (vital machine tools sectors, for example, never developed in the South), and the South’s labor force remained mired in a low-wage environment, isolated from northern labor markets. Post-Civil War southern industrialization never reached critical mass sufficient to transform the South’s economy or shatter its crushing poverty. In frustration, northern investment was viewed as investment by a conquering nation. The Civil War was the recent past; Confederate veterans still alive, and “the lost cause movement,” raged throughout the South. Through devices like Pittsburg Plus steel pricing, southern industry served northern firms rather than southern purposes. Profits flowed north, but northern investment poured south. That northern investment, mostly by northern railroad companies, ameliorated a first-rate southern ED deficiency. With access to its own financing and a half-century of managerial expertise northern railroads had installed the critical southern transportation infrastructure. The railroad corporation had become the South’s primary transportation EDO.
The railroad corporation as an EDO sounds remarkably out of place in contemporary economic development. It feels “so wrong.” But, hatred of railroads aside, while it may have served larger corporate ends, railroad company installation of the South’s core rail infrastructure took the burden off southern governments. The forms of public/private partnership used in this style of infrastructure development differed from that discussed in previous chapters. Gift and loan clauses to the contrary, southern states especially (and western cities in the next chapter) were joint financial partners with railroad corporations through grants, loans, bribery and delegating public powers of eminent domain—and in some instances, bond issuance to the railroads. In return, aggressive railroad tourism and people promotion followed. In these years it was not so much a problem.
Southern City-Building
Southern city-building exploded in this period, tied to a railroad infrastructure, northern investment and the development of an industry sector. But there was one major caveat: the South’s industrial revolution, unlike the North’s, was not accompanied by rapid urbanization. Towns developed, but few major cities emerged (Schulman, 1994, p. 5). Small-scale urbanization, such as mill towns, did occur. Lumber/mining sectors fostered small town city-building as well. Sawmills developed into mill towns. Another rising sector, southern-financed tobacco and cigarette manufacturing, also matured during this era. In such urban centers, former farmers, bound literally for hundreds of years to the soil and rural life, received their first acclimation to urban life and industrial work in the mills. This is faint praise indeed. Similar to immigrants and tenement houses, the mill towns were what they were, but they were characteristic of the South’s early industrialization.
Birmingham, Alabama
The purest example of southern industrial city-building in this period was the “satellite” city, Birmingham being the most successful. Financed by iron/steel firms, satellite cities formed around blast furnaces and grew dramatically. Railroad and northern investment combined with southern surplus agricultural labor were key ingredients. Birmingham, arguably the leader of the pack, deserves a closer look. Birmingham had incorporated in 1871. Surrounded by rich deposits of coal, limestone and iron ore, connected by rail and with financing by northern investors, it quickly became a southern boomtown and an “instant city.” Its factories, furnaces, jobs and population were initially located in a ring of satellite towns outside the city limits. Birmingham had the last laugh, however: it annexed the towns. In 1900, with its population at 40,000, the “Greater Birmingham Plan” sailed through the state legislature and the city annexed a number of surrounding suburbs/unincorporated areas (and their steel facilities). In 1920 its population reached 179,000, almost the same as Atlanta, the South’s third most populous city.
Both a Business Men’s League and a Merchants and Manufacturers Association were formed in 1909, ensuring that the one-percenters and the general business community had a place to go. In the same year the Birmingham Commercial Club moved to a new “ten-story skyscraper” and changed its name to the Chamber of Commerce. Brownell contends that the general business community was not an active participant in economic development policy during these years, leaving that responsibility to the one-percenters: “the most controversial and hotly debated issues of the period were not economic, but moral or religious in character (the issues of prohibition, Sabbath observance, and public dancing were especially important in Birmingham” (Brownell, 1975, pp. 49–55).
Birmingham, very much the blue-collar city, sprawled and built its copycat skyscrapers. By 1924 its working class, employed in the city’s 788 manufacturing firms, exceeded 100,000. About 15,000 worked in the steel mills, and over 5,000 in iron ore mines. Many continued to live on the outskirts or in company towns; unionization was minimal and labor strife (after crushing the 1908 miner’s strike) restrained. Blacks (40 percent of the city’s population in 1920) were increasingly driven from industrial jobs. Pittsburgh Plus pricing, in effect since the 1880s, constrained growth; Birmingham was among the first to cut production during the Great Depression.
Miami, Florida
Miami was a speculative dream of industrialist Henry Flagler (co-founder, with John D, Rockefeller, of Standard Oil; the lawyer who drafted its corporate charter) (Brands, 2010, p. 94). First developing luxury hotels in St. Augustine (Florida), Flagler then bought a railroad, extended it to Daytona, and then to West Palm Beach. Only then did he incorporate a tiny village he called Miami (1895). In Miami, Flagler built a tourist hotel, a rail terminal, an electricity plant, a sewage system and water works; he helped establish public schools and donated land for a town center; and then he built docks and wharfs. In a village of only 260 (in 1896), he started a newspaper: the Miami Metropolis.
In 1911 Flagler brought the Wright Brothers into town to show off their planes. Flagler’s Miami promotion cross-marketed his Florida East Coast Railway on which local residents could travel to the “land of sun-bronzed men, beautiful women, eternally youthful—working, playing and actually living in the fullest sense of the word.” So visit “St Augustine, Ormond, Daytona Beach, Miami, the romantic Keys and finally Key West … Modern hotel accommodations to suit both your taste and purse … Through Pullman service to all East Coast Resorts.” When Flagler died in 1913, Miami had grown to 13,000 (Ward, 1998, p. 64).
Miami’s story was not over with Flagler’s death. E.G. Sewell, a Kissimmee native, arrived in Miami’s early years and opened up a shoe store. In 1914, after perusing a newspaper article, Sewell got to thinking. Sensing that during World War I Americans would not vacation in Europe, he concluded they would be open to an alternative—so why not Miami? “So he passed the hat … and in two weeks raised $3,000 for tourism promotion.” Advertising worked; that winter (1915) 5000 tourists came to Miami. Sewell was quickly elected president of the Miami Chamber of Commerce, and there was no looking back for Miami tourism: “The chamber filled the trains with sacks of literature featuring photos of scantily-clad women acquiring tans … and the tourism flourished” (Mead, 2014, pp. 224–5).
In the early 1920s southern state/municipal advertising revolutionized tourism promotion. Resort tourism had been significant for several generations, but that promotion was mostly private: railroads, hotel cooperatives and other, usually local, private interests operated the campaigns. In the 1920s, however, tourism promotion shifted from coastal resorts to “warm and sunny” coastal cities—but it also shifted into the public arena. “Follow the sun” vacation tourism flourished, pioneered by a raft of southern state EDOs (Florida, Virginia, North and South Carolina, Alabama) and municipal convention and visitor bureaus. The Florida state Bureau of Immigration (1925) added its two cents to state-promoted tourism. If we were to focus on tourism alone, the Sunbelt began as early as the twenties.
Annexation
Annexation played a major role in southern city-building during this period, accounting for much of early twentieth-century southern city growth. Between 1900 and 1920 Atlanta’s population increased by 123 percent and its territory by 138 percent; Birmingham’s population grew by 365 percent and its area by 695 percent; Knoxville’s citizenry increased by 138 percent and its size by 555 percent; meanwhile Nashville, the least aggressive, expanded by a measly 90 percent. (Goldfield, 1982, pp. 129–30) Land speculation and the drive toward central city peripheries, typical of northern Big Cities, was replicated in larger southern cities. Streetcar companies played the same role described earlier in our Big Cities. Periphery and streetcar expansion drove Richmond’s early 1900s’ multiple annexations and led to inventor Frank Sprague’s transportation innovation. Unlike the North, however, a few wealthy suburbs got annexed (Edgefield in Nashville, for example). Goldfield argues that annexation tapped into southern municipal boosterism and a pro-growth, urban competitive hierarchy (Privatist) mentality (Goldfield, 1982, p. 99). Maybe so, but when northern municipal annexation was drawing to a close, southern annexation was just starting.
Ron W. Coan 