On May 2, 1837, George Templeton Strong, who went on to become a prominent New York lawyer, wrote in his diary that the city's economic predicament had been growing "worse and worse." "The prospect of universal ruin and general insolvency of the banks," he said, seemed all but inevitable.
Strong's grave concerns about the economy and, by extension, the city's future were understandable, considering the context: the panic of 1837. This crisis was caused by the bursting of a real estate bubble driven by a national speculative fever. In response, Americans developed a crisis of faith in the nation's banking system, which in turn led to a series of bank failures and high unemployment. As the nation's financial center, New York City was hit hard.
After a downturn that lasted several years, the local economy would not only recover but reach new heights. Between 1830 and 1850, New York City's population would more than double in size. By the end of the Civil War, New York City would become America's undisputed capital of trade and commerce. By 1900, it would claim the globe's most active port and would be well on its way to becoming one of the richest and most developed cities in the world.
As in the days of George Templeton Strong, New York City today, along with the rest of the nation, is facing a very serious challenge. Though we have been through this before (most recently, following Sept. 11, 2001) and though the Bloomberg administration remains confident the economy will rebound, we realize that we can't wait passively for that day to arrive. Instead, we, in the administration generally and at the city's Economic Development Corp. more specifically, are taking aggressive steps to put the city in the best possible position to capture future growth.
The Bloomberg administration has focused on strategies centered on the theme of work -â€“ addressing the immediate fiscal crisis and investing in New York City's long-term economic health.
Making Government Work
First, we need to look at ways to make government work more efficiently and effectively for the people and businesses that call New York City home. So, in the mayor's State of the City address this year, he called for a significant reduction in the Unincorporated Business Tax, a form of taxation that is virtually unique to New York City. If the mayor's initiative is approved in Albany, it could lower or eliminate this tax for up to 17,000 small business owners, in turn providing more money to invest in new equipment or hire new employees. Given that small business accounts for 50 percent of the city's private sector employment, the impact of this change could be significant.
Other measures involve finding new and innovative ways to assist small businesses. We are ramping up NYC Business Express, which will make more than 30 permits available online to entrepreneurs and executives alike. And for those small businesses seeking additional help to stay open, we are continuing to invest significant resources into programs that help train or retrain employees to adapt to the current fiscal downturn.
Putting New Yorkers to Work
Second, we must create new work opportunities for New Yorkers. This includes expanding areas in which there is opportunity for growth, while simultaneously strengthening areas in which the city has historically been competitive, including media, fashion and the arts.
Having a diverse economy is key. For example, we have seen great success in our promotion of tourism -â€“ we had a record 47 million visitors to the city last year. And in film we saw a 92 percent increase in shooting days since 2002. We are also making significant progress in the development of new commercial bioscience facilities on Manhattan's East Side and in Sunset Park, Brooklyn. Similarly, we are working to expand the city's presence in manufacturing and distribution, including the modernization and expansion of the Hunts Point Produce Market in the South Bronx and a major new investment in Staten Island's New York Container Terminal in Howland Hook. And, over the course of the next year, we plan to roll out a series of initiatives in green technology, media and higher education, among other areas.
At the same time, we will not walk away from existing sectors that have been major contributors to the city's economy. We all know that one industry in which the city has traditionally excelled has been hit hard -- financial services. Though, nationwide, many feel little sympathy for the problems faced by this sector, the fact is that it plays a crucial role in the economic well-being of the city, accounting for 9 percent of private sector employment and nearly 35 percent of private sector payroll.
Recognizing this, the mayor recently announced 11 initiatives meant to address the crisis facing the industry. These initiatives will strengthen the city's standing as the financial capital of the world; spur growth in areas of financial services in which the city has been underrepresented, including venture capital; and increase entrepreneurship to help retain and use the talent being shed by the industry in the five boroughs. We expect these efforts to generate 25,000 jobs over the next 10 years.
Capital Creates Work
Finally, our third point involves investment in public works. We believe these investments â€“- bolstered by an injection of federal stimulus funding -â€“ are crucial because they not only position the city to capture long-term growth, but generate jobs in the interim. To this end, we have hundreds of capital projects underway throughout the five boroughs, with the city on pace to invest a record $10 billion in infrastructure in fiscal year 2009 alone.
Examples of major initiatives include the remediation and development of a 62-acre site in Willets Point, Queens, an environmentally compromised area that people have been trying to redevelop for 50 years; the creation of the largest affordable housing development since Starrett City at Hunter's Point South in Long Island City, constructing 5,000 new residential units (60 percent of which will be affordable to middle-class New Yorkers); and the restoration of Brooklyn's iconic Coney Island, under a plan that will not only preserve and expand the area's world-famous entertainment district, but will also result in new housing, park and retail space for the 50,000 underserved residents of that community.
New York City will recover from this crisis. For, as demonstrated by the Panic of 1837, the city has a legacy of emerging even stronger from difficult times. Just as was true in 1837, New York's best days remain ahead of it.
Seth Pinsky is president of the New York City Economic Development Corporation.
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