Real Estate: Where And When


It is a very old joke among real estate brokers that only three things determine the value of a parcel of land: location, location, and location. The reason the joke has been around so long, of course, is that it is mostly true. What’s more, it is true not just on the microeconomic level of a city lot but on a macroeconomic level as well. New York City became the great American metropolis not because of its magnificent natural harbor but because of where on the globe that harbor was located.

What the joke does not take into account, however, is the dimension of time. For instance, around the turn of the nineteenth century my great-greatgreat-grandfather whose name I bear exchanged thirty-five near-wilderness acres in Tennessee for a horse and a saddle. It was, I suppose, a fair deal at the time. Today, alas for the family fortune, those acres are located at the very heart of downtown Nashville.

Time, to be sure, is the peculiar province of historians, not real estate brokers, and over the course of history, when has proved quite as important as where , for while a city cannot move, the tides of history most certainly can. When Venice was at the height of her glory, her location directly on the trade routes with the East made her a great power. Then the rise of the Ottoman Empire interrupted those routes, and the full-rigged ship opened the world’s oceans to commerce. Venice’s once-incomparable location became a grave disadvantage, and she sank to the status of an exquisite backwater.

Unless politically created like Washington, D.C., cities are not located where they are out of sheer whim. Every city has an original raison d’être. Sometimes this is technological: London is located at the first point from the sea where the Thames could be bridged by the Romans. Sometimes it is military: Paris began because the He de la Cité at its heart was a natural fortress, moated by the Seine. Sometimes it is a natural resource, such as the freshwater springs that brought forth Los Angeles.

Most cities, however, come into being for economic reasons. Many arise at points where two streams of commerce join—such as St. Louis at the junction of the Missouri and Mississippi rivers—or at a point where shippers have to break bulk—that is, transfer freight from one means of transportation to another. The Dutch created New Amsterdam at the tip of Manhattan Island because it was the obvious place to switch beaver pelts from Indian canoes to oceangoing sailing ships.

From the beginning New York’s location had many natural advantages over other American ports. It was more centrally located than either Boston or Charleston and much closer to the open sea than either Philadelphia or Baltimore. Moreover, the Raritan River in New Jersey, the rivers of southern New England, Long Island Sound, and the mighty Hudson—great avenues of commerce in the preindustrial era—all led to New York Harbor.

Still, New York was not the leading port during most of the colonial era. Philadelphia had a larger population, and Boston was surrounded by a more populous countryside. In 1770 New York ranked no better than fourth in tons of cargo arriving and clearing the port. Philadelphia led with 47,000 tons arriving, followed by Boston at 38,000 and Charleston at 27,000. New York had 25,000.

A few years later the American Revolution devastated New York. The city was under British occupation for seven years and was swept by a disastrous fire that leveled more than a thousand houses, and its population declined steeply. Many of New York’s merchants either were Tories by conviction or had hopelessly compromised themselves during the occupation. Many left the city when the British finally did on November 25, 1783. Still worse, the treaty of peace provided that all pre-war debts owed to British merchants were due and payable with accumulated interest. Alexander Hamilton, among others, built a brisk law practice in pursuit of these debts.

But if the 1780s were a dismal time for the port of New York, the 1790s boomed. The French Revolutionary Wars greatly increased demand for American products and American shipping. Every U.S. port benefited, but New York did best, and by 1797 it had pulled ahead of Philadelphia to become the busiest American port.

While New York was now in the lead, that lead was precarious. The city, however, had up its sleeve—or, rather, up the Hudson—one more locational advantage that was to make all the others seem insignificant: a gap in the chain of mountains that ran otherwise uninterrupted from Alabama to Maine and isolated the burgeoning Middle West from the East Coast.

Before the coming of the railroad, the cost of overland transportation simply prohibited moving bulky commodities such as agricultural products—which was all the Middle West had to sell—over the Appalachians to the Eastern seaboard. The settlers had either to consume them on the spot in a subsistence economy or to ship them by river all the way to New Orleans and thence to the Eastern seaboard and Europe.

It was Gouverneur Morris who first suggested capturing this trade by building a “Great Western Canal” from Lake Erie to the Hudson River near Albany, utilizing the fortuitous gap. But it was Gov. De Witt Clinton who made it nearly his life’s work to push the scheme through to completion, despite ferocious political opposition. Many of the senators and assemblymen from New York City, shortsighted even by the standards of politicians, opposed the idea, thinking it nothing more than an upstate boondoggle.