Confronting Decline: The Political Economy of Deindustrialization in Twentieth-Century New England

4. Economic Development

chapter 4 Economic Development There has been much discussion . . . about the disadvantageous position of some of our leading industries, such as textiles and boots and shoes, in meeting competition from other parts of the country and abroad. . . . We must bend our efforts towards inaugurating a new era of enterprise and skill in management, so that we can meet and overcome competition. Frederick H. Curtiss, chairman of the Federal Reserve Bank of Boston, Addresses before the Stockholders, 1924 (emphasis added) In the decades after World War I New England elites campaigned to strengthen the area’s existing industries and foster the emergence of new ones. Regional leaders pursued a range of initiatives in response to the decline of textiles and other established industries. Encouraging the growth of area industries was the third of these efforts. The endeavor is known here as “economic development.” New England’s growth drive began in the mid-1920s, soon after the difficulties in the regional economy became evident. Development efforts took place on a continuous basis for decades thereafter. The private sector dominated New England’s growth push of the post–World War I decades, with business associations directing most development ventures. The key organization in this regard was the New England Council, a regionwide business association formed in 1925 with the aim of reviving the area economy. The group functioned according to the principles of “associationalism ,” which emphasized private-sector action and had great influence on U.S. political economy during the 1920s. The New England Council drew strong support from service-sector companies with tight links to the region. Manufacturers of metal goods also played a prominent role in the organiza- Economic Development 103 tion’s work. The New England Council was extremely active in the years from its founding through World War II. It pursued a multifaceted development program, with activities that varied from publicizing the strengths of the area economy to aiding in the recruitment of new manufacturers to advertising regional vacation spots. The New England Council aimed to strengthen the area economy as a whole. The organization therefore encouraged employment growth in all parts of New England, not just in the locales hit by downsizing. State and local government also took part in New England’s development push of the pre–World War II era, although the private sector dominated. An early development effort involving government took place in the 1890s, when regional textile firms first confronted competitive difficulties. In response , state and local authorities in Massachusetts provided key backing for the establishment of textile schools offering advanced training for future managers of that industry. As widespread factory closures took place in the 1920s and after, state governments in New England set up agencies to work for economic development. In the cities and towns hit hardest by industrial decline, municipal officials had a hand in recovery attempts, usually cooperating with business groups that were trying to bring in new employers. All the while New England government continued the traditional public-sector function of providing infrastructure to facilitate growth. An outstanding characteristic of the public and private recovery efforts in New England was a heavy emphasis on the use of research, expertise, advanced technology, and up-to-date managerial techniques as instruments of economic development. This was the approach Boston bank chairman Frederick Curtiss had in mind in calling for “a new era of enterprise and skill in management” to revitalize the area economy. Development initiatives reliant on research and expertise in the period through World War II included the establishment of Massachusetts textile schools; attempts to convince area manufacturers to analyze and streamline their operations in a systematic way; the encouragement of laboratory research to develop new products and processes; and the establishment of a regional industrial research foundation to provide expert advice to those investing in innovative products. Working to improve the flow of finance to new and small manufacturers in New England was a related effort of great importance. It receives extensive treatment in the chapters that follow. As the decline of traditional manufacturing became more widespread in Confronting Decline 104 the last decades of the twentieth century, other areas adopted recovery strategies that similarly emphasized research, technology, small business finance, and new product development. In the United States, activity of this type has been particularly prominent in the states of the old Northeast-Midwest industrial belt. The trend has captured the imagination of contemporary writers on...