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Ronald W. Coan

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Ronald W. Coan

A History of American State and Local Economic Development: As Two Ships Pass in the Night presents a three-part history of American state and local economic development since 1789. Part I concentrates on economic development from colonial times thru 1929. Part II deals with a transition era that starts with the Depression/New Deal and proceeds through Eisenhower (1961). Part III lays the foundation for twenty-first-century contemporary economic development focusing primarily thru the 1990s. Chapter 1 argues the need for, and value of, a history of American economic development as a “bottom-up” jurisdictional public policy perspective that views economic development strategy, tools, and programs as outputs of a jurisdictional policy system. The policy system rests on the jurisdictional political culture which shapes but does not determine its outputs. American economic development has displayed through its history the existence of two macro-political cultures: progressivism and privatism—these are the Two Ships. Each culture forged its own “style” or approach to economic development: mainstream/classic economic development (privatism) and community development (progressivism). The Chapter 1 model provides a framework for the history. That framework includes: characteristics of the profession (“onionization,” siloization, and bifurcation); the three drivers of economic development policy (industry/sector profit cycle, population mobility, and competitive hierarchies); and outputs which can be strategies, tools, and programs delivered by economic development organizations (EDOs) constructed, tasked, and empowered to respond to issues and problems generated in the course of the history. In particular, structural types such as “hybrid public–private,” jurisdictional lead agency, and specialized EDOs are key players in jurisdictional policy systems.

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Ronald W. Coan

The chapter opens by contrasting Penn’s Privatist Pennsylvania and Philadelphia with Winthrop’s Progressive Massachusetts and Boston economic development (ED) evolution through 1820. The importance of political structures (such as state/colonial constitutions, corporate charters, principles of administration and relationships between state and municipality) and how each is shaped by the values of its elite cultures is discussed. From the beginning, ED displays a division between two macro cultures/approaches, each with its own priorities, goals, tools and programs. The chapter’s second theme is the interaction of population mobility (a driver of economic development policy) with economic development structures and cultural values/priorities of migrants. Migrations discussed include the Yankee Diaspora, Scotch-Irish, and Deep South planter/Cotton Belt. Irish and German immigration is also considered. The impact of cultural migration on ED-relevant structures such as form of government, propensity to urbanize, sector/industry innovation and policy priorities are stressed. The reader is introduced to the importance of initial city-building to economic development. By 1850 it is clear that three distinct regions exist (North/Midwest, South and West), and each displays its own shared patterns and goals. From the foundation of the American Republic the practice of economic development reflects the region in which one works and lives. Each region possesses its distinctive cultural values, demographic composition, jurisdictional economic base configuration and period of initial settlement. Each region demonstrates different styles of city-building; produces different jurisdictional policy systems/outputs; and different actors participate in policy-making.

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Ronald W. Coan

This chapter reviews the Early Republic federal government and its relationships with sub-state economic development. Clay’s American Plan,” the reaction of Jackson and the controversial history of Early Republic strategy for “internal improvements” are considered. Early “tools of the trade,” tax abatement and eminent domain, are discussed. The crisis need for transportation and urban infrastructure, as well as fostering banking/finance and manufacturing firms, required the development of our first hybrid public/private EDO (HEDO): the corporate charter. The strengths and weakness of the corporate charter as hybrid EDO and its eventual rejection in the 1840s exerted a profound impact on contemporary economic development in the form of state (and local) constitutional gift and loan clauses. Within a decade a second HEDO, the publicly empowered modern corporation (railroads), was utilized. The construction of roads, steamboats, canals and then railroad transportation infrastructure is examined, with emphasis on the importance of competition with other cities. The importance of railroads as an Early Republic EDO and their innovation of modern strategies of economic development (tourist, industry and people/homesteading attraction and city-building). The chapter concludes with a description and explanation of the 1868 Dillon’s Law decision which to this date has ruled city–state relationships.

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Ronald W. Coan

This chapter concentrates on the early industrial period (1860–80) and begins by outlining the formation of the “Big City” industrial base and the period’s tendency to sector agglomeration. The profit life cycle is described, including a five-phase evolution of industry/sectors over time. The reader is introduced to the Big Cities, the large immigrant/manufacturing centers of the North, Mid-Atlantic and Midwest that had emerged victorious in the Civil War. Big Cities will be the cutting edge of American economic development, and the “initial home base” of community development. The growth in this period of these cities is assessed, with emphasis on infrastructure, particularly transportation, and urban growth. A case study of the late nineteenth/early twentieth-century “Great Subway Race” between New York City and Boston is used to vividly bring to life the competition between cities, the role of business elites and the process by which the infrastructure strategy coped with Dillon’s Law and the weakness of municipal government. A discussion is made of late nineteenth-century city business districts (CBDs), neighborhoods and early suburbs (including the use of annexation and the rationale behind suburban autonomy). Finally, the chapter reviews the “Gilded Age” policy system, elaborating on the process led by business elites, businessmen mayors, real estate exchanges and machine-dominant city councils, and the rise of the first Big City economic development–government economic development organizations (EDOs. The weakness of the public sector in municipal governance and implementation of economic development strategies compel it to “delegate” economic development to private EDOs and require formation of new hybrid EDOs: boards and commissions. This gave rise to “chamber-style” economic development as chambers became the lead agency for Big City municipal jurisdictions.

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Ronald W. Coan

The primary theme of the chapter is “First Wave” chambers as the municipal lead agencies of economic development. The post-Civil War rise of modern chambers—their “one-percenters” governance, primary strategies of attraction/promotion, tourism, tax abatement and deal-making and “exposition competition”, and their subsidiary EDOs (industrial bureaus and industrial parks)—were core to the development of mainstream, classic economic development. Gilded Age city-building is discussed, with privately led “planned communities” such as company towns and Garden Cities as new forms of suburbanization. The turn of the century professionalization of chambers and chamber secretaries, using Ryerson Ritchie as an example, led to the establishment of modern chambers across the USA. A discussion of the usefulness of the First Wave chambers concept follows. The chapter’s second theme is the modernization of municipal government to develop sufficient capacity to conduct meaningful public policy implementation. Home rule, charter reform and the early twentieth-century victory of business “structural reformers” installed strong mayoral, commission and city-manager forms of government. The role played by municipal one-percenters in municipal research bureaus, the formation of the US Chamber of Commerce and the injection of responsible and professional management into municipal government are considered. A final section presents a little-known early municipal strategy—“selling frozen water”—as an example of Dillon’s Law in operation.

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Ronald W. Coan

The rise of community development is a primary chapter theme. From its roots in settlement houses, social welfare, housing reform, community center/recreation movement and the rise of Privatist neighborhood improvement associations it is extensively detailed to demonstrate the development of our “other” economic development approach. A community development-relevant review of socialist and social reform mayors unveils the development of a citywide community development approach in practice. A discussion of the economic development schism among African-Americans is revealed by contrasting Booker T. Washington and Du Bois, uncovering a potential future community development perspective of enormous relevance to contemporary economic development. Community development pioneers a new economic development strategy, the City Beautiful. Developing from the Parks Movement, the Columbian Exposition and leadership of Charles Mulford Robinson, the strategy was adapted and refocused by Daniel Burnham in his implementation of Cleveland’s City Beautiful and his development of the Chicago Plan. Burnham emerges as an economic developer who first articulated and promoted a CBD strategy by central cities to retain influence over their sprawling hinterlands. The chapter concludes with two case studies: Kansas City’s bi-polar City Beautiful and Boston’s Honey Fitz/Chamber of Commerce alliance to implement a hybrid community development/mainstream classic economic development strategy, “the Noble Experiment” that conducted the “port of Boston movement” and attempted the nation’s first “regional government.” That chambers can follow community development strategies indicates the power behind political culture.

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Ronald W. Coan

Make no mistake, the South’s municipal and state governments are not following the Big City economic development path. They exist in a world of their own: the non-industrial, marginally urban, cotton-export/plantation agricultural base, characterized less by large cities than small cotton and mill towns. With no immigrant population to speak of, the South was little disrupted from the political/economic system it reconstructed after Reconstruction. Viewing itself as a conquered nation, more precisely a colony controlled by a Big City political/economic hegemony, southern planter elites made a deal with northern finance, railroads and industrialists that installed what infrastructure was need to make the export/agricultural base profitable. A native urban business class, the New South Redeemers, wanted greater industrialization—but, with rare exceptions (Atlanta), were unable to forge consensus from the South’s “divided mind.” Northern elites, however, built major industrial towns (Birmingham), pioneered city-building based on tourism and land sales (Miami) and were rigidly kept out of southern political life through southern state constitutional gift and loan clauses that preserved a southern economic development strategy that balanced industry with agriculture. Around WWI the Great Migration commenced, and the boll weevil made its first appearance. The chapter includes mini-studies of the Charleston and Atlanta chambers and the New Orleans Port Authority. The final theme is the rise of Texas cities. From the Civil War on, it was clear Texas was not part of the traditional “Old South.” We discuss the early Texan business culture, the role of business elites, the huge development role played by the Houston Port Authority and the economic development competition between Dallas and Fort Worth.

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Ronald W. Coan

The nineteenth-century West was the “Golden Age of American City-Building.” Railroads, homesteading and the craziest set of entrepreneurial city-builders have stereotyped this period. A few examples such as Denver, Wichita and Oklahoma State provide a feel of the era. Massive city-building provides support that it is an incredible element of our economic development history. But there is more. The more pejorative aspects of chamber-style economic development, what opponents label “boosterism,” is much in evidence; but, looking beyond boosterism, chambers built these cities every bit as much as their city-builders. The West is home to the “baby Big Cities” of the Pacific Coast, so descriptive tales are included of growth and economic development in San Francisco, Seattle and Portland with their port authorities and, of course, the “city that economic development built,” Los Angeles (with Frank Wiggins). Most of the West is owned by the federal government and so the onus for western infrastructure fell upon the feds. No infrastructure, no water, no energy, no growth, no urbanization, no economic development. The story of the West really begins with the roads, dams and railroads. But Pacific Coast cities also gave something back to economic development: a sophisticated strategy on how to get the feds to develop your city for you: Fortress California. We conclude with a tale of how the Pacific Coast competitive hierarchy duked it out for federal navy and air facilities long before WWII.

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Ronald W. Coan

The last in Part I, this chapter looks back and collects some thoughts about onionization, siloization and economic growth. The issue of the state’s role in economic development now begins to shift away from Dillon’s Law as we see southern states take the lead in attracting industry from the North. Joining forces with city chambers, the South acquires a reputation for aggressive recruitment and as a pioneer, albeit a grizzly one, in state business climate competition. In that atmosphere, the first professional association, the American Industrial Development Council (AIDC) is established in 1926 to provide education and guidelines, benchmarks and research to proper economic development. The American industrial economy matures, but not without spinning off a new platform sector: the automobile. Formation of the Great Lakes auto complex is described, as is the economic development activities of the Lehigh Valley anthracite coal-mining in Pennsylvania. But the king of all maturing sectors is New England’s textile industry. Can clusters break? In this chapter we describe the second phase of the New England textile war. Next is a long discussion of community development and neighborhoods, the Chicago School, planned neighborhoods, Clarence Perry and Lewis Mumford. Should community development abandon the capitalist pit that is the central city and go and build new suburbs for the working class? A pivotal debate within community development and regional planning revolves about the role of central cities and how Big Cities can live with their growth. Suburbs are growing and are now part of economic development. In the twenties come J.C. Nichols’s Country Club Mall and subdivision. Suburbanization has taken the gloves off.