Meganomics: The Marvel of the Northeast Corridor’s Economic Prowess
By: Harish Ganesh
The Boston Economist — French geographer Jean Gottmann's most famous work, Megalopolis: The Urbanized Northeastern Seaboard of the United States, was published in 1961. The book was based on Gottmann's idea that the cities between Boston in the north and Washington D.C. in the South formed a cohesive "supercity." Gottmann took the term "megalopolis" from the Greek town of Megalopoli. Today, the city is a small agricultural community, but when it was first settled in the 5th century B.C., its founders hoped it would become the largest of the Greek cities. While their dream was never achieved, Gottmann argued that their aspiration to create a megacity was realized in the Northeastern United States.
Today, the Northeastern United States is undoubtedly the nation's economic powerhouse, boasting a population of 58 million and a GDP of $5.1 Trillion while making up a mere 4.7% of the United States' land area. If it were its own country, the Northeastern United States would be the third largest economy in the world, smaller than only China and the remaining United States but still greater than Germany, Italy, Japan, India, and other economic powers. Through a historical lens, we will unravel the forces and events that have shaped this thriving region and, through a financial perspective, examine the intricate factors that continue to fuel its prominence on the global stage.
The Birth of the Northeast
Due to its proximity to Europe, the east coast of the United States was the first part of the nation to be settled by Europeans. The Northeast, in particular, was an unusual place for the Europeans to choose to pay — the land in this part of the continent is not ideal for agriculture or mining, and many of the Puritans who first arrived in Massachusetts in 1621 relied on the Native Americans to teach them to obtain food. However, transportation was difficult, and many migrants tended to stay near the coast and slowly expand outward over the next hundreds of years. Jean Gottmann proposed that the Northeast played a crucial role in the economic chain with its strategically located ports like the Chesapeake Bay, Narragansett Bay, Boston Harbor, and the Port of New York and New Jersey. Valuable goods from other parts of North America and shipped goods from Europe had to pass through the Northeast, granting cities such as New York, Boston, Providence, and Washington D.C. significant economic leverage.
The proximity to Europe continued to increase the power of the Northeast at the onset of the Industrial Revolution — the British model of a textile factory was introduced to the United States in 1790 in Pawtucket, Rhode Island. The invention of the cotton gin by Eli Whitney a year later created an economic boom — cotton produced by the rich soil in the South had to be converted into final goods in factories that popped up across the Northeast, causing the wealth of the region to explode. In 1800, all three United States cities with over 25,000 people were in the Northeast: Philadelphia, New York, and Baltimore. With the boom in textile production, New York, Philadelphia, Baltimore, and Boston held populations of over 100,000 by 1850. Immigrants were soon drawn to the economic opportunity provided by the Northeast.
In 1892, Ellis Island was established in the Port of New York, the only entrance to the United States on the eastern seaboard. In the following decades, millions of European immigrants would come to the United States for financial opportunity that was absent or limited in their home countries. Many of these immigrants chose to work in urban factories along the coast, where the chance was more significant than in the South or the Midwest, where the population relied heavily on agriculture. The influx of workers rapidly boosted demand and productivity, driving the region's potential output higher and higher. In 1910, the United States had 13.5 million immigrants, 15% of the population.
The poor immigrants were not the only ones who saw opportunity in the Northeast. The new immigrants to the United States had a largely speculative financial mindset, which led to entrepreneurship and business founding. Businesses needed loans to start up, and the Northeast became a hub for banking. J.P. Morgan, Goldman Sachs, and other financial superpowers had their headquarters in New York, where the demand for financial services was at its highest.
The combination of ideal geography, large-scale immigration, industrialization, and demand for services led to the growth of the Northeast throughout the 19th century and into the 20th. By 1950, the Northeast held 15% of the entire United States population and the largest GDP of all regions.
Modern History
Following World War I and World War II, foreign immigration to the United States had been restricted by the federal government, a driver of the Northeast's prowess. By this point, however, Wall Street in New York City was the world's finance, telecommunications, and innovation capital. The Northeast was also home to some of the world's best real estate and educational opportunities. Schools like Yale, Columbia, Harvard, Princeton, and MIT drew white-collar workers. The Northeast led healthcare innovation.
1965, the United States government resumed the immigration flow, albeit in a much lower volume than in the early 18th century. Skilled workers from Europe as well as Asia found work in the Northeast.
Today, the Northeast remains the most potent economic region in the United States and a leader in innovation in technology, finance, education, and medicine — New York City alone is home to more than half a million healthcare workers across over 70 hospitals. Investment Banking income on Wall Street totaled $54 Billion in 2018. With Boston University, Harvard, Boston College, Bentley, Northeastern, and many more prestigious schools, Boston is home to over 350,000 college students, contributing approximately $5 billion annually to the city's economy. The city is home to over 5,000 startup companies, many in artificial intelligence and biotechnology. Philadelphia is home to 5 Fortune 500 companies. Two of the wealthiest counties in America are in the D.C. metropolitan area. New Jersey, New York, Massachusetts, and Maryland all boast immigrant populations of over 15% of their total population — many of these immigrants are skilled workers as opposed to the many agricultural immigrants in the South or West.
Conclusion
The Northeastern United States is a testament to the transformative power of history, geography, and human ambition. Jean Gottmann's vision of a megalopolis, born from the region's strategic ports and geographic advantages, has not only materialized but has flourished into an economic juggernaut that commands global attention. As we marvel at the Northeast's present-day achievements — a population of 58 million, a GDP surpassing $5.1 trillion, and a status as the nation's nation's economic powerhouse — we are reminded that its success is a testament to the interconnectedness of history, geography, and human endeavor. Beyond economics, the Northeast United States is undoubtedly the giant melting pot of cultures in the world — the region holds the greatest concentration of Jews outside Israel and of Hindus outside Asia and a large catholic and atheist population relative to the predominantly Protestant United States. The Northeastern megalopolis stands as a living embodiment of what can be achieved when visionaries, immigrants, entrepreneurs, and scholars converge to pursue a shared dream — the American dream.
Sources
https://en.wikipedia.org/wiki/Northeast_megalopolis
https://en.wikipedia.org/wiki/Northeastern_United_States#Industrial_Revolution_and_modern_times
https://www.newworldencyclopedia.org/entry/Northeastern_United_States#New_England
https://en.wikipedia.org/wiki/Immigration_to_the_United_Stateshttps://new.artsmia.org/period-rooms/just-imported
https://www.bts.gov/archive/publications/bts_fact_sheets/october_2010/entire
https://www.loc.gov/classroom-materials/industrial-revolution-in-the-united-states/
