The economy of New York City still reels from the attack on September 11, to which has been added the economic effect of global recession and Wall Street’s sharp decline. Official estimates of what the World Trade Center attack alone may have cost the city economy run as high as $100 billion. For many New Yorkers, however, the attack on the World Trade Center was a new wound at exactly the spot where an old wound, going back nearly half a century, had not yet healed. They felt again their grief for the bustling, gritty harbor culture of the old Lower West Side that planning for the World Trade Center, completed in 1974, had bulldozed under. They mourned the century-old redbrick Washington Market, Radio Row with its hundreds of small businesses, and the throbbing West Side docks, which were moved to New Jersey. They missed the hundreds of ships that crowded the harbor and the swarms of blue-collar workers and shopkeepers that had animated the streets of lower Manhattan, along with the bankers and traders of Wall Street. They wondered how New York City could recapture all the jobs it had lost, going back fifty years.

Now, in A New Deal for New York, Pulitzer Prize-winning historian Mike Wallace, co-author of Gotham: A History of New York City to 1898, gives us a high-spirited, old-style broadside, published just a year after the September 11 attack and chock-full of ideas and inspiration for reinvigorating New York City. By making New York’s chronic economic conditions acute, Wallace says, the tragedy helped us galvanize the will to confront them. In fewer than 100 pages, Wallace stirringly argues for his vision of a renewed New York City. He takes dozens of post-September 11 think-tank briefs, website proposals, government reports, all cited together nowhere else, and melds them into a larger perspective.

Moving from lower Manhattan outward, Wallace first discusses rebuilding. Next, in the book’s key section, he argues that in our concern to rebuild lower Manhattan, the rest of the city is getting lost in the shuffle. He suggests ways to stimulate New York’s economy. Finally, he invokes the New Deal period, when New York City, with massive government help, at first suffered and then conquered economic disaster. Emphasizing that the New Deal is not a perfect template for today, Wallace nonetheless concludes his book with a mesmerizing litany of its accomplishments in New York, a veritable hymn to the New Deal’s heroic scale of government achievement, a moving inspiration to civic action.

Let us look first at the book’s vigorous central section, Wallace’s proposal for reviving the city’s troubled economy, and single out some key suggestions. New York, he points out, is cripplingly dependent on the fragile Wall Street monoculture, which has accounted for 5 percent of the city’s total employment, but provided 19 percent of New York’s wages and salaries and, between 1992 and 1999, some 50 percent of the growth in gross state product.


Wallace argues that the city must diversify and, in particular, protect and foster manufacturing, now an invaluable but neglected corner of our economic garden. Making shrewd use of data from the seminal report “Making It in New York,” by the Pratt Institute Center for Community and Environmental Development and the Municipal Art Society, Wallace argues a brilliant brief.

Fifty years ago, New York was the leading manufacturing city in the United States. Garment manufacturing and printing, among other industries, were centered in the city. Since World War II, however, New York has lost some 750,000 industrial jobs. Wallace argues that this happened mainly because of wrong ideas. “Many civic and corporate leaders,” he says, “actively dismissed the production of things as a grungy leftover from the archaic old days.” “Free-marketeers chimed in with claims that the plummeting number of industrial positions…represented nought but the inevitable (and inevitably benign) consequences of globalization.” Those theories did not account for the fact that New York lost manufacturing jobs at six times the national rate. Thus unmourned, half a million jobs slid into oblivion.

The Pratt-MAS study attributes much of the loss to intense development pressure on manufacturing areas in New York City’s superheated real estate market. Unlike back-office buildings or telephone call centers, factories cannot locate anywhere, but must usually be near their customers and suppliers. New York City, however, has done too little to ease the pressures of high-profit office development and renewal projects in areas where lower-rent manufacturing plants have previously thrived, including, currently, Chinatown and the garment district. To which a student of the New York City economy must now add Long Island City, where office development also threatens manufacturing.

Having visited many small New York manufacturers, I can attest that the city’s factories, in lofts and small buildings, often in single-industry clusters throughout the five boroughs, churn out an astonishing variety of products. Custom furniture, architectural woodwork, lighting fixtures. Printing. Graphic arts. Mannequins. Optical equipment. “We’re particularly good at high-value, low-volume production of customized, time- and design-sensitive products, which demand close cooperation with (and proximity to) customers,” Wallace says. That is precisely what many New York City architects, advertising agencies and clothing manufacturers want. Wallace reminds us that with 240,000 jobs, manufacturing remains a crucial component of the economy, set alongside 490,000 in finance, insurance and real estate (FIRE). Manufacturing has a greater multiplier effect than service or retail–it spins off more additional jobs–and it provides entry-level jobs for non-English-speaking immigrants as well. The importance of small businesses in general, not just in manufacturing, is also stressed: “Gotham,” Wallace emphasizes, “is a small business town: 99.7 percent of all city businesses have fewer than 500 employees.”

Despite the multiplier effect of manufacturing and the employment it gives to immigrants, municipal policy nonetheless favors big finance and real estate, heaping tax abatements and other advantages on developers. Developers who argue that manufacturing can’t “make it in the marketplace” sing an entirely different tune when they deposit their own subsidy checks in the bank.

In an urgent call to action, Wallace says that attention must be paid to endangered manufacturing sites everywhere in the city. He urges New York to designate “industrial sanctuaries–overseen by a Trust for Industrial Space–that combine zoning protections, infrastructure improvements, and industrial development incentives, along with pollution controls and restrictions on speculative real estate conversions.” New York City can revive manufacturing.

The Port

From 1860 to 1950 New York City was the greatest port in the world, the source of New York’s commercial might. As with manufacturing, however, wrong ideas, and negligent or wrongheaded municipal policy, first allowed the port to decay and then shuffled it off to New Jersey. But it can be reborn, Wallace says, with some big-league intervention. Again, large economic forces have been in play, including, to name a few, containerization, superannuated docks and competition from air cargo transport. The effect of these forces was accelerated by the shortsighted conviction that New York City would be better off without such supposedly antediluvian activities.

Now opportunity knocks again, Wallace says, and it moves toward New York City. The newest ships, called post-Panamax, are too big for the Panama Canal. Accordingly, a container from Southeast Asia must sail west via Suez across the Atlantic to New York. Action is already being taken to blast and dredge the Kill Van Kull to allow these ships into New Jersey’s Port Newark and Elizabeth. New Jersey can’t handle all the traffic by itself, though, and terrorists could shut down the New Jersey port by sinking just one mammoth vessel in the channels.

Thus the port of New York has an opportunity. There are proposals that would allow the huge ships to dock at offshore concrete caissons, as in Europe and Asia, from which “high-speed cranes could transfer containers to barges for direct transshipment around the harbor, or to double-stack rail cars at the old 65th Street train yards,” bringing modern shipping to Brooklyn and other deepwater upper harbor locations. Containers could then be shipped over the still-existing tracks of the old Bay Ridge line, across the Hell Gate Bridge, and on to the rest of the Northeast.

Thanks to the Robert Moses-era focus on automobiles alone, rather than, say, trains, New York’s roads are clogged with containers that arrive in northern New Jersey and Delaware and that then, on board trucks, cross the Verrazano Narrows Bridge into Brooklyn or the George Washington Bridge into Manhattan, heading toward Long Island, Westchester and southern Connecticut. Wallace supports Representative Jerrold Nadler’s long campaign for a mitigating alternative, calling for construction of a cross-harbor freight tunnel. Congress appropriated additional funds for an environmental study of that tunnel in early December. Along with an increase in the use of rail float cars, the tunnel would reduce the number of tractor trailers on the roads.


Corporations have been moving their jobs out of New York City for a long time–between 1988 and 1995 New York City lost 57,000 jobs in banking alone, precipitating a full-blown collateral depression in real estate; but lower Manhattan had long ago lost its place as the center of commerce. Already in the 1920s, midtown had become the central business district by establishing direct rail links through Grand Central Terminal and Penn Station to the expanding suburbs. Great office towers were built in midtown, and they soon bested downtown’s both in height and numbers.

Downtown was hardest hit. David Rockefeller tried to revive lower Manhattan, building Chase Manhattan Plaza in 1960. He persuaded his brother Nelson, then governor, to tear out sixteen acres of the Lower West Side and erect the World Trade Center there. The docks were traded away to New Jersey in exchange for the Hudson Tubes, now the PATH trains. Even these drastic measures, however, failed to revive lower Manhattan. Rockefeller’s Chase Bank itself moved its headquarters to midtown. The World Trade Center, heavily subsidized for years, flooded downtown with excess office space and was partly empty for much of its history. Developer Larry Silverstein had just leased the center, doubtless to the Port Authority’s great relief, when the September 11 attack occurred.

Nothing so demonstrates the dysfunction of the government’s economic policies before and after September 11 as the history of the city and state’s so-called retention payments to corporations. Instead of underwriting the port, which of course must be in New York, and instead of protecting the manufacturing sector, much of which wants to be in New York, the city and state have chased large corporations with a checkbook, lavishing billions on companies that do not want to be in New York, and paying them to keep jobs here. For example, Mayor David Dinkins’s administration (with the state government) set in motion $145 million in tax breaks for the four commodities exchanges. Another example: When Morgan Stanley considered moving its headquarters and 4,200 jobs to Stamford, Connecticut, it got $40 million to stay. Claims that giveaways were offset by new jobs and taxes have been found suspect, Wallace reports. Efforts at paying corporations to keep jobs in New York continue. The Lower Manhattan Development Corporation (LMDC) is seeking to give away millions of the federal government’s post-September 11 aid to companies, if any, that will agree to move to lower Manhattan.

After the September 11 attack, lower Manhattan quickly became a hot battleground for architects, developers and planners. This past September, with new infrastructure not yet planned, the architecture critic of the New York Times, Herbert Muschamp, disdained all critical distance while parading the fantasies of his own favorite jet-setting architects in the Times Magazine, even as he effectively excluded competing traditionalist architectural proposals.

Remarkably, no fewer than three government entities now claim to be preparing official plans for lower Manhattan. The two principal agencies, long rumored to be in disagreement, are the Lower Manhattan Development Corporation, the planning agency created by Governor George Pataki as a subsidiary of the New York State Urban Development Corporation, on the one hand, and the Port Authority of New York and New Jersey, which owns the land under the World Trade Center, on the other. Planning was expected to enter a decisive, faster-moving phase after December 18, when the LMDC published plans from its seven teams of architects. The Port Authority, for its part, said it will release its plan for lower Manhattan by February, focusing on infrastructure and transportation.

All certainty went out the window, however, when Mayor Michael Bloomberg, in an operatic gesture, announced to a startled public in early December that he had been working on his own plans for lower Manhattan, and that he would reveal those on December 12–six days before the LMDC’s release.

Where’s the Money?

In the recent fat years, Wallace suggests, much money has been diverted away from the public treasury and, by means of numerous tax cuts, fed into private hands. Wallace writes that although Mayor Bloomberg’s term to date has been exemplary in many ways, he has nonetheless “balked at…plumping up the revenue side of the budget.” That was then. On November 14, after publication of Wallace’s book and after the election, the Mayor proposed a remarkable 25 percent hike in property taxes to help close this year’s budget gap, and the City Council promptly granted an 18.5 percent increase. The revenue side of the budget will be further plumped up if Albany agrees to revise the personal income tax to include income earned in New York City by nonresidents.

As to a timetable, although the average citizen may not be in a hurry, many other people are. As a landowning and rent-collecting agency, the Port Authority would like its income stream; the City of New York, which had expected up to $75 million a year in property taxes from the World Trade Center, would like its revenue; the Australian shopping-mall developer called Westfield America, which owned the mall in the World Trade Center, the fifth-largest in volume in the United States, would like income from a new mall. To his great credit, Mike Wallace favors going slowly in lower Manhattan.

As I noted at the beginning of this review, Wallace argues that in our concern to rebuild lower Manhattan, the rest of the city is getting lost in the shuffle. Thus he has suggested ways to invigorate New York’s economy, finally invoking the New Deal period, when the city, with massive government help, at first suffered and then conquered economic disaster. Mayor Bloomberg’s new proposals for lower Manhattan rely on funding sources outside the city budget and do indeed assume massive government help, including the tax-free Liberty Bonds that are already available for New York’s rebuilding, plus a possible federally funded tax plan for foreign corporations to induce them to locate in lower Manhattan.

The Mayor’s proposals for lower Manhattan are city planning on a grand scale to which New Yorkers have recently been unaccustomed, but for which his chosen chair of the City Planning Commission, Amanda Burden, is well-qualified. The Mayor calls for making West Street into a tree-lined boulevard, for extending other streets, for building ten thousand units of new housing, some at below-market rents, in two new lower Manhattan neighborhoods, in addition to 65,000 new units he proposed for the whole city just days beforehand. The Mayor’s proposals include ferry stations, a bus parking facility, a public library, schools, public squares and other amenities, to make two vital new neighborhoods. His most expensive proposal, at $4 billion, is a new tunnel to provide a one-seat transit ride from lower Manhattan to John F. Kennedy airport.

The Mayor, that is, proposes using massive government help, exactly as Wallace urged, and he proposes using it for the kinds of projects Wallace supported. It is too soon to tell whether, by focusing such intensive interventions on lower Manhattan, the Mayor perpetuates the neglect of New York City’s larger economy for which Wallace also sought remedies, or whether he has plans for that larger economy, too, including manufacturing. It is too soon to tell whether the proposal for a transit tunnel to JFK might come at the expense of the more important cross-harbor freight tunnel, now working its way through Congress under the aegis of Representative Nadler.

Whatever gets built, Wallace strongly urges active citizen involvement in planning it. He takes hope from the response to the highly publicized, privately financed meeting of some 5,000 citizens, many of them relatives of victims, at the Jacob Javits Center this past July, sponsored by the Civic Alliance to Rebuild Downtown New York. The LMDC had compelled designers to cram the World Trade Center’s 11 million square feet of office space, plus a hotel, plus shopping, into much lower buildings, all on the same site, with results that were predictably chunky. The meeting overwhelmingly panned those proposals and the LMDC withdrew them, choosing seven new teams of architects at work under looser guidelines.

What other models are there for the citizen participation that Wallace advocates? In 1962, and again in 1968, the brilliant urbanist-economist-activist Jane Jacobs led her fellow Greenwich Villagers in protests that defeated plans for a Lower Manhattan Expressway, an eight-lane elevated highway that would have obliterated what is now SoHo. Absent another Javits Center meeting or the personal leadership of another Jane Jacobs, however, citizens’ voices are likely to be muted.

In an inventive suggestion, Wallace urges that the governor should voluntarily subject plans for lower Manhattan to the Uniform Land Use Review Procedure under the City Charter, even though the developers of Ground Zero are legally exempt. This suggestion is intriguing. As a longtime student of city land use, I recall that ULURP did score a triumph in 1996, when opponents halted Mayor Rudolph Giuliani’s proposal to open wide streets in almost every district zoned for manufacturing to developers of big-box stores like Home Depot, with no community recourse under ULURP but rather “as of right.” When all the hearings were done, none of the city’s community boards favored the Mayor’s proposal, no borough president supported it and only one member of the City Council, Andrew Eristoff, voted for it.

Wallace writes fluidly even when he is urgently shaping not just historical trends but dense webs of numbers; in the end, his urgency is persuasive. He fits this volume to the age of the Internet, with not just a bibliography but the addresses of websites appended and the promise of updates on the Gotham Center site. New Yorkers may not achieve another New Deal, but, informed by him, they can testify, they can write, they can act. Wallace persuades the reader that if New Yorkers have the will, they can revive their city.