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Planning for economic development is an old American tradition. In many ways it antedates the sort of city planning we have discussed in this book. In the nineteenth century a great many cities took steps to strengthen their competitive position vis-a-vis competing cities. Quite naturally, much of the push came from the city's merchants, since it was they who would profit most from municipal economic success. Most often, such planning efforts were directed toward the transportation infrastructure—to increasing the accessibility of the city. In a day when overland transportation costs per ton-mile were a large multiple of what they are today, a significant reduction in those costs could give the merchants in one city or town an overwhelming advantage over competitors in other cities.1

Probably the best-known example in the nineteenth century was the building of the Erie Canal. In the early 1820s a group of New York City merchants perceived that obtaining good access to the Midwest would confer a tremendous economic advantage on the city. The way to do this in the pre-railroad era was to build a canal connecting the Hudson River to Lake Erie. Private capital was quickly raised for the task, and within a few years the canal was completed. By the 1830s, a decade or so after its completion, the canal was carrying close to 1 million tons of freight per year, giving New York an enormous commercial advantage over its two main rivals of the time, namely Boston and Philadelphia. The great age of canal building in the United States, approximately 1800 to 1830, was largely a matter of municipal initiative, each city trying to steal a march on its competitors.

The age of canal building ended abruptly with the coming of railroad technology, but the same story of municipal competition was repeated. Many of the early railroads were built with municipally raised funds, and the competition between cities and towns to be on a rail line was intense. In many cases municipalities purchased railroad bonds to provide the capital to build a line that would put them on the map commercially. In other cases municipalities guaranteed bonds to make them marketable.2

When the U.S. rail system was fairly well developed, competition switched to other areas, particularly manufacturing. For example, the movement of textile manufacturing from New England to the southeastern United States resulted in part from recruiting efforts of local merchants and municipal governments.

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