1-B-i-a-2, Chicago boom and bust

1-B-i-a-2, Chicago boom and bust - A cycle of capital...

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A cycle of capital waste, Chicago, 1830-37 The following notes purport to show how the above principles may be derived from events in a 19th Century episode of boom and crash. 1 The narrative centers on Chicago, then an infant city. A Cycle of Boom and Bust: Chicago, 1830-40 Notes by Mason Gaffney These notes are most useful if studied in conjunction with "The Canal Boom," a chapter in Homer Hoyt, 100 Years of Land Values in Chicago , Chicago: University of Chicago Press, 1933. Herewith a summary of major events, major principles at work, and their interpretation. 1. What happened in Chicago happened elsewhere in the nation, and the N. Atlantic economy. The world moved more or less in sync. Even then, much of the world was linked by capital flows; Chicago was a part, a particularly volatile part, of one stupendous world drama. 2. What happened in this cycle happened both earlier and later: this was only one of many. Chicago grew in fits and starts, not steadily. 3. The amplitude of cycles was greater on the economic/geographic fringes than at the core. This refers to cycles in population, land values, and economic activity. a. Chicago was at the macro fringe of settlement based on New York State's Erie Canal, opened in 1825. Besides that canal, there was new freedom of competition in shipping, barging and steamboating on rivers and the Great Lakes: in 1824 the U.S. Supreme Court outlawed shipping monopolies (Gibbons v. Ogden). 1 Alternatively, they may be derived a posteriori from world history, then applied a priori to Chicago. This writer's evolution began in Chicago with a study of Homer Hoyt's work.
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Chicago held what we now realize is a key macro-geographic site, a continental crossroads and a breaking point. Its importance was not yet clear to all contemporaries, however, so it was marginal for its times. The famous Gallatin Report 2 of 1808, which identified almost all key routes needing improvement, missed the route of the Illinois and Michigan Canal, the key to developing the advantage of Chicago's location. More credit goes to General "Mad Anthony" Wayne who defeated the Shawnees and other Indians in 1794 at the Battle of Fallen Timbers near modern Toledo, Ohio. Wayne then urged Congress to found Ft. Dearborn on the site of Chicago. Wayne's insight into economic geography and location value had been sharpened by his earlier profession, surveying, coupled with his strategic military planning. Chicago's micro-site was and remains a "stinking swamp," which is what Chicago means in the tongue of the Pottawottamie Indians who named it. It is still "The Windy City," with an unattractive climate. Shawneetown on the Ohio, and Cairo at the meeting of the Ohio and Mississippi, seemed more promising. It was not clear for decades that this site would become the capital of the midwest. In a famous early incident, the banks of Shawneetown refused credit to a town as unpromising as Chicago. b.
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1-B-i-a-2, Chicago boom and bust - A cycle of capital...

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