Cities And Economic Pivots

Let me tell you about perhaps the greatest missed opportunity in urban economic history.

Source: detroithistorical.org

Here’s something I think about a lot. I believe in that Shakespearean phrase “what’s past is prologue”, meaning that past events serve as a good indicator of what the future may hold. Or, as AI just told me when I asked for its interpretation of the phrase, the past provides context and background for understanding the present and planning for the future.

In the context of cities, this applies to the economic histories of numerous cities across America. Throughout history cities have been founded for economic, social or cultural reasons. They are places where people initially came together to trade, to administrate, to celebrate, to defend. Later on, cities would find new reasons for their existence, often built on the knowledge gained from the city’s earlier phases.

Consider New York City. A deepwater seaport connected to a river that reached deep into the hinterlands made Manhattan an excellent location for the fur trade 400 years ago. The early Dutch and later British settlers were able to bring furs from the interior to New York Harbor and shipped to Europe. More entrepreneurs sought other goods to sell across the ocean. A link to European markets was established, and that enabled other commercial ventures to flourish. That created opportunities for banking, financing and investing to grow.

Soon, New York City and business became synonymous. Very early on, it became not just the primary physical point of entry into America, but the economic entry as well, for foreign investors interested in making money, and immigrants looking for employment. That made it easy to become a city that would be skilled in media and publishing, interpreting and explaining American events to a worldwide audience. Elite universities both within and just beyond New York City’s limits would reinforce this, making sure a steady stream of smart and ambitious people were always attracted to it. Sure, it sounds seamless, but it wasn’t. There were aspects of this that overlapped, but there were aspects that had gaps, too. Still, in retrospect New York’s economy grew something like this.

However, “what’s past is prologue” is true, only up to a point. Sometimes cities serve an economic function well, until that economic function isn’t needed anymore. When this happens, cities are often sent adrift as they ponder the next economic driver.

This is easy to think about when looking at river cities that supported freight shipping activities until railroads made barge traffic irrelevant, or the manufacturing centers of the Midwest that couldn’t compete with global low-cost labor. Yet this is also true of Southern cities that served the 19^th century plantation economy, either through slave importation (Charleston, Savannah) or the shipping of products coming from plantations (New Orleans, Memphis). In all cases, one economic reason for being ran its course, but another one had yet to be identified.

As a Midwest native who’s seen the region’s economic diminution up close, I wonder about how those opportunities to reset happen.

When are new ideas or opportunities presented? How did city leaders, business elites, major institutions react to a possible reset? The answers to these questions can tell you a lot about how today’s thriving urban areas got where they are, and others are still lagging.

Consider the San Francisco Bay Area, specifically Silicon Valley. From an historical perspective, it’s pretty well understood that San Francisco rose to prominence as the financial capital of the West, spurred on by rapid growth due to the California gold rush in the 1850s. Across the bay, Oakland’s position as a deepwater port and the terminus of the nation’s first transcontinental railroad allowed it to become an industrial and manufacturing center. To the south, however, the areas that would become Silicon Valley (San Mateo and Santa Clara counties) were probably best known as “the largest fruit-producing and packing region in the world up through the 1960s”.

That changed shortly thereafter, as “past as prologue” took over in the Bay Area. The region became a military research and technology hub, driven by the U.S. Navy, beginning in the early parts of the 20^th century. Stanford University’s role in nurturing faculty and graduates to start their own businesses led to the creation of the Stanford Research Park in 1951. Numerous tech businesses got their start there, and by the 1980s a global technology center was born.

Silicon Valley, however, wasn’t the only region that had a shot at this kind of reset. It could’ve been Detroit.

It’s worth it to see this extended quote from the Detroit Historical Society:

“It is generally agreed that no American city contributed more to the Allied powers during World War II than Detroit. Appropriately, Detroit grew to be known as "The Arsenal of Democracy," a term coined by President Franklin D. Roosevelt during one of his Fireside Chat radio broadcasts.

Because of its strength as a manufacturing capital, Detroit was an ideal city to take on the challenge set by the President. The Detroit area’s automobile industry underwent rapid transition in order to handle the production of weapons and vehicles of war, ceasing production of vehicles for civilian use. Large auto factories, small tool and die shops, pharmaceutical manufacturers, boat builders and more began swiftly producing jeeps, M3 and M4 tanks, bombers and airplane assemblies, artillery guns, ammunition, helmets, drugs, electronics, and countless miscellaneous parts and pieces.”

This part is particularly interesting:

“Ninety-one percent of all Army helmets were stamped in Detroit. Chrysler’s Detroit Arsenal Tank plant in Warren, Michigan created half the tanks made in the U.S. By the summer of 1944, Ford’s Willow Run plant completed one B-24 bomber every hour. General Motors was responsible for the greatest percentage of war materiel during the period. U.S. companies produced 2,665,196 vehicles of all types for military use by the end of the war.

If it had wheels, Detroit industrialists were in charge of manufacturing it. The Guardian Building was transformed into an annex of the Pentagon. Many corporate officers became high-ranking Army officers in order to skirt bureaucratic red tape. In all, Detroit firms, with facilities across the country, produced 25 percent of everything used by our allies.”

Detroiters are rightfully proud of the role the city played in World War II. Unfortunately, when presented with the chance to focus the city’s manufacturing might in another arena, the city’s political and business leaders passed. Instead of opening up a new defense and aerospace industry in Detroit, the automakers said, “let’s get back to making cars.”

Detroit could’ve done what Silicon Valley did, at the same time. And, due to its role in the war, would’ve had a distinct advantage over it. Certainly the auto industry’s corporate execs, middle managers and assembly line workers got an extensive education in defense materiel during the war period; they would’ve been primed for the transition. The University of Michigan, roughly the same distance from Detroit as Palo Alto’s Stanford is from San Francisco, could have been the research institution that incubated emerging aerospace firms. This has to be one of the biggest missed economic opportunities in American history.

Today, Detroit is undergoing a comeback that many people thought would never happen. It hasn’t been complete; there are still large pockets of the city that haven’t witnessed any part of the city’s revitalization. However, the revitalization is real.

That said, a Detroit that becomes a defense and aerospace research and technology leader probably is a city that doesn’t fall from a population peak of 1.9 million in 1950 to under 700,000 today. It isn’t known for its vast expanses of abandoned property. It doesn’t become a city that has to file the nation’s largest municipal bankruptcy.

If Detroit’s post-WWII leadership had listened to what its past was telling it in the late 1940’s what the future had in store for it, the revitalization would’ve never been needed.