November 1990 | Volume 41, Issue 7
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.
When the Erie Canal was finally completed in 1825, after eight years of digging, a huge statewide ceremony was held. A barrel of water from Lake Erie was transported by canal barge from Buffalo to Sandy Hook at the entrance to New York Harbor. There Clinton poured most of it into the Atlantic, signifying the wedding of the waters that lay at opposite ends of the state. Along with the water from Lake Erie, waters from the Rhine, the Ganges, the Nile, and twelve other great rivers of the world also were poured into the Atlantic. New York City, in its characteristically imaginative and unsubtle way, was boasting of its coming greatness as a center of world trade.
The boast was soon fulfilled. Before the canal, a ton of flour worth $40 could be shipped, overland, from Buffalo to New York in about three weeks for $120, quadrupling its cost. On the canal the same ton could be transported in eight days at a cost of $6. With such changes in the economic equations, it is no wonder that New York soon became, in the words of Oliver Wendell Holmes, Sr., a “tongue that is licking up the cream of commerce and finance of a continent” and the greatest boom town the world has ever known.
Between the opening of the canal in 1825 and the beginning of the Civil War thirty-six years later, New York grew so fast that it built on average some ten miles of newly developed streetfront per year. By 1860 the city handled fully two-thirds of the nation’s imports and one-third of its exports. In other words, more than half of all American international commerce passed through New York, largely thanks to its location 150 miles downriver from a gap in the mountains.
Now, it must be admitted that in history, if not real estate, location is not quite everything. From its earliest days New York was the most commercialminded of American cities. The Puritans of Boston, the Quakers of Philadelphia, and the Catholics of Baltimore founded their cities first of all as religious havens. But the Dutch founded New Amsterdam solely to make a buck. So busy were they buying beaver pelts that they didn’t get around to building a church for fourteen years.
This commercial drive greatly contributed to New York’s climb to the top and continues to characterize the city to this day. As Robert Greenhalgh Albion points out in his magnificent The Rise of New York Port, 1815-1860 , published in 1939, the successful push by New York merchants to broker the trade between Southern cotton growers and European and New England textile manufacturers played no small part in the growth of the port, regardless of its location.
The Southerners saw themselves as gentlemen farmers and didn’t want to appear to dirty their fingers with anything so vulgar as money. The New Yorkers were only too glad to dirty theirs. By the time the Southern states began to secede, the cotton trade had become so important to New York’s economy that the mayor, Fernando Wood, went before the city council and proposed that New York become a “free city” apart from the Union.
By the 1920s New York was the greatest port not only in the country but in the world as well, eclipsing London, and it maintained this hegemony for decades. But just as the tides of history and technology first brought Venice to greatness and then left it behind, so they continue to shift today. New York’s near monopoly of transatlantic passenger travel, for instance, disappeared with the coming of the jet plane.
Far more important have been the shifting patterns of world trade. Trade across the Pacific has been growing by leaps and bounds while Atlantic trade has merely been steadily increasing. Today the West Coast’s traffic with East Asian countries and in Alaskan oil far outstrips East Coast trade with Europe and Africa.
The result: in 1989 Los Angeles-Long Beach became the country’s busiest port. There is a considerable irony here. You see, New York was founded on account of its great harbor, but Los Angeles was founded twenty miles inland and didn’t have a harbor at all until an artificial breakwater was completed in 1914. Regardless, Los Angeles is located on the right ocean for the late twentieth century, and New York is not. As they say, it’s location, location, and location.