LITMIR.BIZ

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have thus rightly described the growth of the regulatory state as the critical development of the era. Yet these facts too often obscure another key part of the story of American political economy. Namely, the state played a crucial role in promoting economic development long before the Progressive Era, and industrial capitalism thrived because of—not in spite of—public policy, which was as crucial to its emergence as the initiatives of private business leaders.

      Over the last three decades, scholars have become increasingly focused on the state’s role in promoting industrialization. For much of the twentieth century, though, state power figured little in the works of business historians who trained their attention on individual capitalists, big firms, and corporate middle managers.²¹ Beginning in the 1980s, historians and political scientists began to, in the words of Theda Skocpol, “bring the state back in” to studies of economic development.²² Since then, scholars of American political development and historians of capitalism have shown that the market economy was not just a wild creature to be tamed by the state; rather, it was largely a product of monetary policies, infrastructure, and laws crafted by the state well before the Progressive Era.²³

      The recognition of a large, powerful state prior to the early twentieth century suggests that progressivism was not so sharp a break with the past, as some scholars have suggested, and that social and economic engineering were hardly new. Chicago’s waterfront is an example of what might be termed earthy pragmatism—that is, experimentation with the landscape as an instrument of social and economic change. The city’s existence depended on it.

      For Chicago to function as a site of production and exchange, several threats to economic development had to be eliminated: sandbars and swamps that blocked travel to and from Chicago; railroad and grain elevator monopolies over crucial waterfront spaces; and the virulent class conflict that threatened the socioeconomic order. From the start of the city’s history in the 1830s, Chicago’s brand of buccaneering industrial capitalism depended on Chicagoans’ success at making the city’s waterways and its waterfront into ports, points of railroad connection, sewers, sources of drinking water, and grounds for pleasure and public life. Yet, the elemental relationship between Chicago and its waterways is often overshadowed by the city’s storied past of soaring skyscrapers, mass production, and deadly confrontations between workers and capitalists at sites such as Haymarket Square and Pullman.

      How did the desolate swamplands that Hubbard slogged through in 1818 become, long before his death in 1886, an intensely managed waterscape supporting the life and economy of a massive metropolis? The history of Chicago and its relationship to water suggests that—contrary to claims made by some of Chicago’s chroniclers and the historians’ master narrative of the era—markets and cities do not sprout up in the absence of strong government. Instead, Chicago and the markets that constituted it were creatures of the state, in large part because they required significant environmental engineering and regulation to flourish.

      The history of Chicago’s waterfront suggests that the conventional dualisms—private versus public and free enterprise versus state regulation—do little to explain the rise of nineteenth-century industrial cities. Chicago was created by a state that blended public and private institutions, personnel, and agendas.²⁴

      In Chicago, governmental power was often an extension of the interests, agendas, and efforts of a small number of business leaders. The sandbars, monopolies, and class violence that might have thwarted Chicago’s economic growth were largely contained through creative collaborations between government officials and business leaders. Together, they fashioned public infrastructure to make Chicago accessible, established economic regulations to facilitate trade, and created public spaces on the waterfront to spur tourism and ease class tensions. In so doing, they transformed a muddy, desolate bog into a waterscape conducive to exchange, accumulation, leisure tourism, and class harmony—a means for profit making, a form of liquid capital.

      Liquid Capital: Making the Chicago Waterfront travels through time across one of North America’s most pivotal economic spaces: from the canal construction boom of the 1830s; to the great legal and economic battles over monopoly in the late nineteenth century; to the grittiest, smoke-filled days of the Industrial Revolution; and to the dawning of a prettier, leisure-centered capitalism at the start of the twentieth century. It tells the story of a waterscape continually transformed, of poet Carl Sandburg’s Chicago: “Building, breaking, rebuilding.”²⁵

      CHAPTER 1

      Making a River Run Through It

      Until deep into the nineteenth century, it was uncertain that Chicago would become the continent’s preeminent inland metropolis, but even so, the promise and pitfalls of its geography were immediately obvious to the first Europeans who surveyed the center of North America. In 1673, the French explorer Louis Joliet and Jesuit missionary Jacques Marquette made the portage at Chigagou after having explored the upper Mississippi River Valley.¹ Marveling at the route’s imperial possibilities, Joliet reported to the governor of French Canada, “we can quite easily go to Florida in boats … There would be only one canal to make by cutting only half a league of prairie, to pass from the lake of Illinois, [Lake Michigan] into the St. Louis River, [the Des Plaines and Illinois Rivers].” Such a canal would link Quebec to the fertile lands of the continental interior where, Joliet advised the governor, there would be “great advantages … to founding new colonies.”²

      The French, however, soon realized that constructing just a canal might not suffice to give them access to the center of North America. The explorer René-Robert Cavelier Sieur de La Salle, who camped at the site in the winter of 1682–1683, was similarly enthusiastic about the location, predicting that it would become a “gate of empire” and “the seat of commerce.”³ Yet, he saw obstacles to using the canal proposed by Joliet. In a letter to New France’s governor general, La Salle quipped that Joliet’s “proposed ditch” would do nothing to remove the “sand bar at the mouth of the channel [of the Chicago River] which leads to the lake of the Illinois [Lake Michigan].”⁴ If the river’s mouth remained clogged with sand, most boats would never reach the canal imagined by Joliet.

      Together, La Salle and Joliet had identified the main challenges to capitalizing on the site’s transportation advantages: it would be necessary to dig a canal across the portage and to dredge the sand-clogged mouth of the Chicago River. Those were matters of statecraft no less than feats of engineering, and the French lacked the incentive and the capacity to build in so remote a place. It was not until 1718 that the French-Mississippi Company founded New Orleans, completing the imperial arc from Montreal to the mouth of the Mississippi River. The expanse of territory between those two cities was, moreover, only a sparsely populated fur trading region over which the French state had limited administrative control.⁵

      Marshalling the money and manpower to construct the canal envisioned by Joliet—and remove the sandbar observed by La Salle—is, of course, a story of American, not French, politics. French-claimed and Indian-controlled, Chigagou became the Anglo-American fur trading post of Chicago in the eighteenth and early nineteenth century. From the 1830s to the 1850s, American policymakers worked in tandem with private investors to transform that little outpost into a great port city by making a river run through it, one connecting Chicago to the Atlantic and to the Gulf of Mexico.

      By the middle of the nineteenth century, the state, city, and federal governments, as well as numerous private individuals, seemed to have resolved the environmental paradox of Chicago—that the city’s location both beckoned and repelled waterborne travelers. Through their combined efforts, the Army Corps of Engineers, Chicago alderman, and various individual property owners had transformed the Chicago River from a sluggish stream into a navigable waterway—albeit one that required constant, costly upkeep—complete with bridges and wharves. Even more critically, the state’s canal commissioners and investors had replaced the portage that was at once so convenient and so unpleasant to use with a canal grander, by far, than the one imagined by Joliet in 1673.

      These feats of engineering transformed the

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