Edward Glaeser

Urban Colossus: Why is New York America’s Largest City

June 2005

11398

Paper Website

Ian Gorovoy

2006-2-17

2006-4-1

Urban Colossus: Why is New York America’s Largest City

New York City is home to over 8 million people and continues to grow. In fact, it is the only city out of the 16 largest in the Midwest or Northeast that has a greater population today than it did 50 years ago. Its economy remains robust. Like all other cities, it has gone through crises. However, New York’s calamities have been brief. Dark periods for cities like Boston, Chicago, and Washington DC lasted for over 30 years, but NYC’s worst period lasted for less than a decade in the 1970s. Why has New York City been so successful? In Urban Colossus: Why is New York America’s Largest City , Glaeser finds that geographic determinism carrierd NYC to the forefront. The location and attributes of the New York port made it the most important port. From trade, he describes how manufacturing in the nineteenth century and finance and information in exchange in the twentieth century fed off the superiority of the port to ensure the near continuous success of NYC.

The New York port is the best American port because of its location and qualities. The port is deep, has a great connector from the ocean in the Hudson River, and is linked by water to the Great Lakes. It is close to Europe, which provided goods and immigrants to the port. Also, it lies relatively in the center of the Eastern seaboard. Goods from Boston must first pass by NYC anyways. Compared to the Charles River of Boston, the Hudson is much deeper, longer, and more easily navigable. In the nineteenth century, travel by water was the cheapest method. NYC took advantage of this fact because the Erie Canal connected New York to the Great Lakes of the Midwest. The New York harbor is also less prone to ice because it is warmer than Boston and more ocean-based than Philadelphia. Despite Philadelphia’s more southern location, the fact that it is 100 miles from the ocean (compared to 20 miles for NYC) means that there is a greater probability for freezing along the connecting river.

In the colonial days, NYC was primarily used as a fur-trading post. Because it is surrounded by water, it was easier for the colonists to defend against the natives. However, early on, Boston was the bigger city. Boston largely owed its success to selling foodstuffs to the southern colonies for cash crops, and then processing these products and selling them for large profits to Europe. NYC and the surrounding area had better land than Massachusetts for agriculture so they had a comparative advantage when they adopted foodstuffs for cash crops to process model. The ethnic heterogeneity and religious tolerance absent in Puritan Boston provided advantages as well. Being an irreligious colony, immigrants from many different cultures brought their diverse skills to New York. Thus, New York’s role as a haven for immigrants is ingrained in its colonial roots.

Despite these advantages, NYC was only the third or fourth largest port until the Revolutionary War. New York was the only port that remained in British hands throughout the war. The city grew exponentially during the war. By 1860, NYC was the biggest and most important US city. Its population grew from 33,131 in 1790 to 813,699 in 1860. There are two main reasons why NYC rose to prominence during this time: the superiority of the port meant that helped it completely dominate shipping and immigration and lower transportation costs near the port meant that the processing of goods shipped in soared (e.g. sugar, publishing, and garment-making).

The economies of scale and increasing attractiveness of the hub-and-spoke shipping system favored the notion that one port should become the most important one by a lot. Transatlantic ships became increasingly large over the early nineteenth century. These ships required less crew members per ton and were smaller and faster. These larger ships created a tendency to centralize because they needed a market to accept its larger cargoes. The centralizing nature of the larger ships was coupled to a growing insurance system and auction house to handle these larger cargoes. Glaeser argues that the hub-and-spoke system ensured that one port would become the most important by far, and the superiority of the New York port ensured that it would be number one.

By 1850, New York had only 11,360 people in trade compared to 43,340 in commerce. New York’s port may have been the catalyst for rise of the city, but manufacturing became more important. Early on sugar was king, and Glaeser uses this example to illustrate why it is most efficient for manufacturing to be located near the trade center. Sugar refining was highly capital intensive for its days so economies of scale occurred in centralization. Small towns could not support the machinery. Pure sugar coalesces during the long sea voyage so sugar processing could not occur at the source in the West Indies. However, processing can remove so much of the weight that some basic processing occurs at the source. In this case, the heavy sugar cane was processed into raw sugar at the source.

The city was also ideal for the garment trade because need for space and power was quite mild. The geographic determinism described in sugar refining also gave the city an advantage. New York was better suited for garment production than England because it invented the ready made-to-wear clothing style and had better information about local styles. There was an initial comparative advantage because the materials came into the New York port, but it was subsequent agglomeration of talent and knowledge that kept the trade in the city.

New York also became dominant in publishing. The rise highlights the increasing role of New York as a city centered in the transfer of ideas. The early development of its publishing was due to its connection to Europe because of its importance as a trading center. In the first half of the nineteenth century, the big money in publishing was in pirating the novels of English authors where British copyright laws did not apply. Being the center of trade, the novels reached New York first, making it the natural place for their re-printing. Because New York was the principal trading hub, news was especially important and a disproportionate number of newspapers also were published in the city.

Glaesar writes that immigration was another key contributor to the success of NYC. Because of its port, New York was the central place where the new labor force entered the US. Throughout the nineteenth and early twentieth centuries, transatlantic voyages became cheaper and safer and more immigrants migrated accordingly. However, most of these new immigrants remained in NYC because transportation costs within the United States were still expensive, the economy showed versatility in increasing its scale with the influx of new labor, the improvement of transportation (e.g. streetcars and subways) within the city making the development of new boroughs more feasible, and the city had considerable social and political infrastructures specific to immigrants. Little immigrant communities formed, and it was easier for a Jewish immigrant to remain kosher in the City than in Nebraska.

The author explores the question of whether all of this new labor outstripped the labor supply. If NYC’s growth reflects mostly the growth in the labor supply, wages in New York should be falling relative to the rest of the nation. Glaesar finds that their wages outpaced the national average meaning that there was an increase in labor demand and the immigrants provided this additional labor. Therefore, immigrants came to NYC because of cheaper and safer ocean travel but stayed because of higher wages, saving on transportation costs, and the specialization of the city in dealing with imports of all kinds.

In 1921, a restriction on immigration limited its boom. Also, advances in trucks and cars dropped transportation costs, which was one of the biggest advantages of NYC, dramatically. Land was very expensive in the cities so most manufactures moved out of the city. This happened in all of the major cities. Of the top ten US cities, only Los Angeles and New York did not consistently lose people. Crime and mismanagement by local governances exacerbated the problems of the city. Philadelphia, Detroit, and Pittsburgh never survived this collapse of local manufacturing that had occurred by 1960. Glaesar finds that New York City survived and thrived because it was able to reinvent itself as a service city increasingly oriented around finance and corporate management.

NYC’s place as the financial center also owes its success to its role as the premier port. Wall Street’s origin lies in organizations that shared the risk of sea voyages. Philadelphia was the major financial center during the Revolutionary years but New York replaced it for several reasons. First, New York’s connection to England became more important as British investors became major backers of American businesses. Also, there is a great incentive to agglomerate finance in order to better share the latest information and lower transactions costs. Glaesar argues that in this respect New York had a slight edge initially which turned into dominance when the economies of scale of sharing information were realized.

The increasing density of New York City may have pushed manufacturing out of the city but it promoted information sharing. Lots of people in proximity are conducive to chance meetings and the general flow of information. The costs of delivering manufactured goods depends mainly on transportation technology, but the cost of delivering services depends on technology and the value of the time of the individuals involved in the transaction. Because services are by definition face-to-face, especially during rising wages, there is an incentive to condense these activities. Thus, services were able to replace industry because of the advantages of being in a large, dense city.

Finance also boomed in the second half of the twentieth century because individuals invested more, international finance soared, and there were improvements in communication technology and regulations. However, the improvements in communication technology may signal the end of the importance of face-to-face meetings which are the comparative advantage of New York. The city has made progress in other areas: the city is becoming more attractive and safer. Real wages in the City are much lower today than in 1970 highlighting the idea that people want to live there for the city itself. Glaesar believes that NYC may re-invent itself as a consumer city.

My view

I loved this article. NYC has a clear advantage over other Eastern seaboard cities and I see why. I really like Glaeser’s writing style. I read his article on poverty and saw an article of his being cited in the paper I reviewed on culture. I see no weaknesses in this article. It was long but very enjoyable.

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