Emerald City: How Capital Transformed New York

Christopher.

Chapter 1

From its inception New York has been a city of contradiction. In its early Dutch days as New Amsterdam it was a beacon of cultural tolerance when compared to surrounding New England, symbolized by the Flushing Remonstrance of 1657 (Flushing then known as Vlissengen) that challenged director-general Peter Stuyvescent’s suppression of Quaker settlers, yet its Dutch history featured two bloody conflicts and fairly consistent shady dealings with the indigenous population. In the mid-eighteenth century, New York was one of the first cities to grant voting rights to African-Americans who met property owning qualifications when just a few years before rumors of a widespread slave uprising (slaves made up about 20 percent of the city’s population) sparked a witch hunt and series of executions, of both black and white persons, that compare with the more infamous episodes in Salem. New York was the first capital of the independent US despite the fact that it was the first city occupied by the British during the War of Independence (New Yorkers celebrated Evacuation Day for many years afterward). Nineteenth-century New York was a city of Irish and German immigrants while also being the city of the Know-Nothings. Far from being a liberal center of abolitionism, the civil war era featured a mostly slavery accommodating bourgeoisie up to the start of the war and later the very anti-black draft riots, then the largest urban insurrection in American history.

This continues to the current day. For decades now New York has been billed a city of renaissance and prosperity, its present constantly compared to darker days of the late 1970s and other periods. Yet New York’s poverty rate (and near poverty rate) during the 1970s equaled the national rate (in the 1960s, New York’s rate was two-thirds the national rate); it now dwarfs the national rate by more than 40 percent. As of 2016 New York’s poverty was 19.5 percent. The poverty rate, along with the near poverty rate, officially up to $47,634 a year for a family of four, encompasses almost half the city. Large stretches of the city are more and more becoming a playground for millionaires and tourists, the waterfronts colonized by luxury condominiums. High-end buildings designed by star architects dot the landscape and celebrity chefs open restaurant after restaurant. New York is celebrated as one of the world’s centers of diversity, and the city government celebrates New York’s role as a sanctuary city, meanwhile the city has one of the most segregated school systems in the country. The Rust Belt has drawn the lion’s share of media focus regarding the opioids epidemic, parts of New York have been hit as badly as anywhere – if the Bronx were a state (its half-million population makes it roughly equal to Wyoming) its rate of overdose deaths, 34 per 100,000 people, would be second only to West Virginia¹. The Bronx has long been the poorest urban county in the United States. New York has some of the highest priced housing in the world, and a homeless population of over 60,000.

The process by which New York became safer and more glamorous while becoming poorer and less equal speaks to economic, political, and cultural dynamics that go back decades. For urban areas these dynamics can perhaps be broadly described as deindustrialization and gentrification. Obviously these dynamics are highly symbiotic and apply to cities far beyond New York; in fact they can probably be applied to some extent to every American city. As federal money has been withdrawn, cities are pitted against each other in a global economy. Cities that are said to have transitioned from an industrial-based economy (Pittsburgh, Seattle, San Francisco) are considered superstar cities whereas others are considered failures (Detroit, Baltimore, St. Louis). Urbanist Richard Florida describes the process as winner-take-all urbanism where cities fiercely compete for businesses. In 2018 this was seen in its most grotesque form with dozens of cities competing through very lucrative subsidy offers to win the honor of hosting Amazon’s second headquarters, only to see Amazon in the end dividing its promised 50,000 jobs among two metro areas already considered superstars, including New York where Amazon originally planned to build a headquarters in rapidly gentrifying Long Island City, Queens. The plan included $3 billion worth of subsidies for Amazon. One of New York’s booming waterfronts, no other neighborhood in the country in recent years has added as many new apartments as Long Island City. According to a study by RENTCafe, since 2010 Long Island City has added nearly twice as many apartments as Downtown Los Angeles, the neighborhood that was second on the list². The average income along the waterfront is $138,000. Fortunately, local opposition forced Amazon to back out of the deal.

Or cities compete in attracting what Florida calls the creative class through universities and infrastructure initiatives, and/or tourism. Prominent industries, such as technology and finance, despite their obvious global reach, tend to be highly concentrated in selected cities. The cities that win the game become playgrounds for tourists, urban professionals, and the global elite’s lives of consumption, with immigrants and the working class providing the labor in the service economy. Those cities that fail sink further in economic stagnation, population decline, and poverty. According to the Brookings Institute, between 2010 and 2017 nearly half of the country’s total employment growth occurred in 20 large metro areas, while the Economic Innovation Group reveals that from 2010 to 2014 five metro areas³, New York, Miami, Los Angeles, Houston, and Dallas, produced as big an increase as the rest of the country combined (with the New York and Washington metro regions accounting for roughly half of the net increase across the country between 2007 and 2016)⁴.

As the defeated Amazon deal illustrates, an important part of the process, at least from the point of view of private companies, is subsidies. According to a report by the Citizens Budget Commission, New York spent $9.9 billion on state and local development in 2018, up 17 percent from 2016. State costs were $4.8 billion, an increase of $965 million from 2016. Local tax expenditures increased $458 million⁵.

For a majority of the twentieth century New York was a city of industrial workers. While the percentage of workers engaged in manufacturing peaked in 1910 at just over 40 percent, the overall number of workers engaged in manufacturing increased every decade in the first half of the century with the exception of Depression years of the 1930s. In the immediate aftermath of World War II, obviously the driver for pushing New York’s manufacturing production to an all-time high, New York’s workforce numbered 3.3 million of which fewer than 700,000 were professionals or managers. In 1950, though by then seven of the ten largest cities in the US had a higher percentage of their workforces engaged in manufacturing than New York, New York contained more manufacturing jobs than Boston, Detroit, Philadelphia, and Los Angeles put together⁶.

Beyond the sheer numbers of New York’s industrial economy was its uniqueness. Given New York’s density and high land costs, its factories were much smaller than the vast Fordist factories of Pittsburgh and Gary. In 1947 manufacturing establishments employed on average 25 workers, less than half the national average of 59. When companies expanded and their production standardized, they would more often than not leave New York for roomier places. In New York manufacturing was diverse and flexible, a Silicon Valley of sorts that generated a disproportionate amount of US patents; at its peak there were more than 70,000 firms in various stages of production. Much of the production was specialized in areas such as machinery and custom-made jewelry. Its garment industry was well attuned to changing styles and trends. In absolute terms New York had a goods-producing economy of unprecedented size and complexity. Just as present day cities with thriving tech industries are known for their clusters of idea networks, flexibility, and spillover effects that combine to spur innovation so Joshua Freeman in Working Class New York describes New York’s garment industry:

In some cases versatility was a trait of individual businesses. In other cases it was a trait of constellations of firms, each of which in itself might be quite specialized. For example, the apparel industry was not really one industry but many...Within each of these sectors were jobbers, who designed and sold apparel and sometimes cut the needed material; contractors, who made apparel from material and specifications given them by others; and manufactures who performed both functions⁷.

Of course, there is always a risk of romanticizing the past. Factory work can be back-breaking and post-industrial New York is a less polluted, healthier city. The very pro-corporate Mayor Bloomberg was on the forefront of good nanny state reforms such as banning smoking in restaurants and bars and trans-fats from city menus. However, there is no way around the increased poverty and inequality the economic transformation has unleashed. A basic source of economic inequality in cities stems from the division between professionals earning high (or at least very livable salaries) and the working class working in low-wage jobs in the service economy. Such is where manufacturing is missed. In 2013, manufacturing jobs in New York City paid $51,000 a year on average, compared with $25,416 for positions in retail, hotel, and restaurant sectors⁸. To get a nationwide sense of the American job picture consider that the largest private employers are currently low wage service sector jobs: Wal-Mart (fortunately outlawed in New York), Amazon, Kroger, Yum! Brands (the corporation that operates Taco Bell, KFC, and Pizza Hut), and Home Depot.

The national economic transformation had its origins in New York. And from the beginning city planning and policy was as large a factor as any other in making it happen. New York’s famous 1916 zoning law, the first comprehensive zoning law in American history, was driven in part by the proximity of Manhattan businesses to the shopping district of 5th Ave. A century ago business in New York often meant factories and New York’s center featured the Garment District. Factories paying lower rent threatened nearby property values. The zoning law established separate commercial, industrial, and residential districts in Manhattan (the outer boroughs were classified unrestricted meaning the three could be mixed). If separating residential and industrial districts has the defendable result of isolating industrial pollution to a limited extent, the zoning law also isolated industry and the working class.

The latter idea seems to have been on the minds of planners. Economist Robert Haig summarized it like this:

Some of the poorest people live in conveniently located slums on high-priced land. On patrician Fifth Avenue, Tiffany and Woolworth, cheek by jowl, offer jewels and jimcracks from substantially identical sites...A stone’s throw from the stock exchange the air is filled with the aroma of roasting coffee; a few hundred feet from Times Square with the stench of slaughter houses. In the very heart of this commercial city, on Manhattan Island south of 59th street, the inspectors in 1922 found nearly 420,000 workers employed in factories. Such a situation outrages one’s sense of order. Everything seems misplaced. One yearns to rearrange things to put things where they belong.

In 1929 the first Regional Plan Association (RPA) report was released. Founded in 1922, the RPA bills itself on its current webpage as America’s most distinguished urban research and advocacy organization and an indispensable source of ideas and plans for policy makers and opinion shapers across the Tri-state region. Its yearly conference is an event. The cornerstone of the RPA is seldom but vast plans it issues. There have been four in its history: The first in 1929, the second in 1968, the third in 1996, the most recent in November 2017.

Like practically all civic associations the RPA has been dominated by business and real estate interests. In 1929, under the leadership of planner Thomas Adams, there was the Rockefeller Foundation, powerful Brooklyn landowner FB. Pratt (son of the more famous Charles Pratt), major Queens landowner Charles G. Meyer, Robert De Forest, a former politician who owned much undeveloped land on Long Island, Dwight Marrow of Morgan Bank, also a director of New York Central Railroad, Frederic Delano, uncle of the future president and director of numerous railroads, and an officer from the Otis Elevator Company, elevators being a necessary technology for skyscrapers. The RPA project was funded largely by the Russell Sage Foundation – Russell Sage being the nineteenth-century finance and railroad baron, (and robber baron). After Sage died in 1906 his wife Margaret Olivia Sage established the foundation with a $10 million gift. The foundation was the main financer of the Forest Hills Garden, a wealthy, private neighborhood in Central Queens.

While intentionally trying to avoid using the word, the 1929 plan was an exercise in decentralization. The plan envisioned a sprawling collection of bridges and highways out of New York City. The George Washington Bridge (construction started in 1927, according to the RPA webpage, Based on RPA’s recommendation in the first regional plan, the Port Authority relocated a planned Hudson River crossing at 57th Street and replaced it with the George Washington Bridge at 178th Street), the Whitestone Bridge (1939), the destructive Cross Bronx Expressway, the Henry Hudson Parkway, and the Verrazano Bridge (1964 – RPA’s webpage: effectively completed the regional highway system that had been proposed by RPA in 1929), were all built according to RPA proposals.

The same has been true for deindustrialization. The RPA’s plan envisioned a Manhattan cleansed almost entirely of manufacturing below 59th Street, including the entire West Side below 14th Street. What was to remain were a few scattered pockets. Most crucially, the plan called for New York’s port, the harbor being what gave New York its edge over early rivals Boston, Philadelphia, and Baltimore making it the largest city in the country (about three-quarters of the country’s wholesale trade in the early 1950s was transacted through New York⁹), to be moved across the water to Elizabeth, New Jersey. This was all achieved.

Of course, none of it could be done overnight. Critics who underestimate the effect of the RPA plan due to the timeframe of its eventual achievement are misguided. Development is a long game, far beyond the whims of daily politics. The image needn’t be one of mustache-twirling villains pulling strings in a sinister puppet show (though in the case of the Rockefellers it can be said that David and Nelson furthered John Jr.’s cause). The point is elite planning being realized in the long run and such planning is endemic and generational. In 1929 globalization wasn’t a glamourous word and things like containerization weren’t part of any vocabulary. Either the members of the RPA in 1929 were unbelievably prescient or simply interested in their own vision and interests.

To begin with the plan ran smack into the Great Depression then World War II. Tammany Hall, long the machine of the Democratic Party in New York, specialized in working-class patronage and served as a counterforce. The rise of the Reform wing of the Democrats in the early 1960s, signified by the reelection of Robert Wagner in 1961 after his break from Tammany, provided an opening. By then there had been other plans put forward in the same spirit of the 1929 plan. In 1958 the Downtown Lower Manhattan Association (D-LMA) was founded by David Rockefeller. Rockefeller would become president of Chase Bank 2 years later and move the bank’s headquarters downtown to One Chase Manhattan Plaza. Robert Moses encouraged Rockefeller to develop a plan for the area leading to D-LMA’s forming.

In 1961 the city put forward its second major zoning law (after the first in 1916). The 1961 Zoning Resolution substantially shrunk manufacturing zones in Manhattan. Heavy industry was to be moved to the outer boroughs and light manufacturing limited only to Manhattan’s waterfronts. The central areas were cleared out as foreseen by the 1929 plan (the 1961 Resolution divides the entire city into commercial, residential, and industrial zones, not just Manhattan as in the 1916 Zoning). Despite still paying lip service to the importance of manufacturing to the city’s economy, official policy was geared toward its elimination.

Like the RPA, D-LMA has from its inception been a vehicle for financial and real estate interests. Its webpage declares D-MLA to be Downtown stakeholders committed to the vibrant business community. Other players in D-LMA’s founding included G. Keith