1 Edison’s Decision By George Wise 2 Table of Contents Chapter 1 ...................................................................................................................................................... 3 Introduction: Evolution or Revolution? ........................................................................................................ 3 Chapter 2 .................................................................................................................................................... 11 Barhydt, Jeronimus, revolutionary soldier, Pine: Schenectady Becomes a City. ........................................ 11 Chapter 3 .................................................................................................................................................... 32 Kittle, Widow, cotton factory: Looking for Export Industries ..................................................................... 32 Chapter 4 .................................................................................................................................................... 51 Riggs, Stephen S. cashier, Mercantile Bank, 31 State: Banks and Railroads .............................................. 51 Chapter 5 .................................................................................................................................................... 75 Ostrum, Ralph, Watchmaker: Machines and Machinists ........................................................................... 75 Chapter 6 .................................................................................................................................................. 107 Van Eps, Jacob G. 19 Rotterdam: Decision and Beyond .......................................................................... 107 Chapter 7 .................................................................................................................................................. 151 Conclusion: Industrial evolution from the middle out. ............................................................................ 151 3 Chapter 1 Introduction: Evolution or Revolution? In 1886 Thomas Edison moved a business for which he did not intend to work to a city where he did not intend to live. Around that decision pivoted the history of the little city of Schenectady, New York. The history of that little city can serve as a case study answering specific questions, and illuminating a more general one. The general question concerns the 19th century process of the industrialization of the U.S. Was it evolution, or revolution? This book is a history of industrialization from the viewpoint of one particular little city, aimed at illuminating that larger historical question. That term industrialization will not be defined precisely here. It means pretty much what you think it does: large establishments instead of small shops, employees instead of independent craftsmen, manufacturing instead of agriculture, railroads in place of canals, coal and iron in place of water power and wood, and then oil and steel in place of coal and iron, electricity in place of shafts, pulleys and belts, and much more. Cities in general, and little cities in particular are worth defining. A city is a settlement with population greater than 5000 people, with at least 2500 people concentrated in an area of a square mile or less. Cities come in many sizes. Here those sizes will be designated as magnitudes. Each magnitude is about three times the population of the previous, smaller, one. There are seven such magnitudes, ranging from the smallest, or seventh magnitude, with population of 5000-17,000 people, commonly approximated at 10,000 people, on up to the first magnitude, a city larger than five million people. This commonly approximated value of 10,000,000 is about as large as a city can get before evolving into a multi-centered metropolitan area. For the purposes of this book big cities are first, second and third magnitude. Little cities are fifth six and seventh magnitude. Into which size class you put the fourth magnitude, 300,000 person cities, a class until recently exemplified by Rochester, New York, is a matter of choice. For present purposes, it suffices to point out that the frequent complaint that Schenectady is, in the early 21st century, a second-rate city is both unkind and inaccurate. At population 60,000, it is, just barely, a fifth magnitude city. This assigning of magnitudes is more than numerical quibbling. Cities form systems. Cities of different magnitudes occupy different places in the system, both geographically and functionally. The biggest cities typically lie where an ocean or a great lake meets a significant river. Those biggest cities typically specialize in such areas as finance, information, culture, education, politics and medicine. Little cities, by contrast, typically lie where a significant land route meets or crosses a river. They typically specialize in a particular area of manufacturing, service, or government administration. Not for nothing 4 do they earn such nicknames as the Collar City, the Spindle City, the Rubber City, the Carpet City, or, in the case of Schenectady the Electric City. There are hundreds of little cities in the US, and they collectively contain a respectable fraction of the US population, perhaps a quarter or more. Yet their role is clearly subordinate to that of the large cities. It will be shown here for Schenectady, and will be conjectured here for little cities in general, that the decisions that most influence their history are almost always made in big cities. Schenectady was shaped not only by the Edison decision, made in New York City, that provides this book's title, but by a half dozen or so of other major decisions made in Albany, Philadelphia, and in New York City back when it was still called New Amsterdam. A convincing theory explains why the dominance of big cities is even greater than their greater population would suggest. A key to economic growth is the creation of and dominance over new industries. New industries are created by, and are dominated by, the combination of people with complementary skills. The number of combinations possible grows much faster than the number of elements. So the bigger the city, the disproportionately larger is its role in the combinations of skills that fuel growth, whether invention, organization, or finance. This can be summed up in an idea from economics: cities show increasing returns to scale with population. The US city system began as a weakly connected hub-and-spoke network of a dozen or so cities, most of them on the Atlantic Coast. New hubs formed initially on the inland rivers, then on the canals that supplemented the rivers, then at the lowland locations easily reached by railroads, and finally in relatively difficult to reach places such as Denver that offered riches worth linking with an expensive railroad. Eventually, even railroads became only one specialized part of a more general transportation network. That system in 1800 contained only sixth and seventh magnitude cities: Philadelphia and New York at the top, at the border of fifth magnitude, most other cities in the seventh magnitude class. U.S. city population doubled roughly every 15 years in the 19th century, mainly by the creation of new cities. Since the U.S. population as a whole doubled only every 25 years, the city fraction rose from about one- tenth of the population in 1800 to something like half by 1900. In that year, the system stretched over six magnitudes. The entire twentieth century added only one more. The biggest cities dominate not only in numbers and decisions, but qualitatively as well. By disproportionately participating in invention and industry creation, big cities tend to move up the industrial food chain: from transportation, commerce and manufacturing to finance, information, culture, medicine, law and education. What role does this leave to the little cities? Here invoke another economic concept, comparative advantage. The very dominance of big cities, initially in manufacturing and invention as well as commerce and finance, makes their real estate more and more valuable. Activities that require large amounts of land and energy, and that produce large amounts of waste products, tend to move out to cheaper real estate. 5 So this process of industrial outflow is one key element in the little city story. A second is the process of industrial inflow. Inventors of entrepreneurs may begin their lives in the rural hinterland, as did Thomas Edison of Milan, Ohio. They move up the city hierarchy. They tend to do so not in one giant leap, but in small steps. This inflow, complementing industrial outflow, leads to those little city manufacturing specialties. Sometimes industrial inflow is evident within a single family: George Westinghouse, Sr.'s move from the town of Central Bridge, NY, to Schenectady, followed by George Westinghouse, Jr.'s move from Schenectady to Pittsburgh, PA. There's a third step in the process. Overbuilding on their outflow and inflow opportunities, little cities, particularly in the U.S. northeast, grew too big to sustain. This later step, industrial overshoot, is, however, a twentieth century story. Thus runs a theory of the influence of little cities on industrialization. Cities constitute a system, and within the system little cities provide outflow sites for big cities, and inflow sites for towns and the countryside. How about the impact of industrialization on little cities? Did