The Future of New York

Can the moxie and markets of this wounded global city conquer terror and recession?

It is, and has been for four centuries, a culture of creative congestion, a miasma of intense interaction, a kaleidoscope of diversity, a cauldron of dreams, a sanctuary for the odd, the hunted, the hated. New York. It's an ill-fitting city in many ways: not "American" enough for America--too polyglot and raucous, too rude and rapacious. It's a place where the marketplace dominates the church, crowded streets replace the open frontier, foreign tongues displace the nation's English, and the economy faces out toward the world rather than into the hinterland.

While America was building a distinctly transcontinental culture, New York was making something else: a global culture. If, over the centuries, America was often appalled by the disorder of New York, the city's vision of an open, pluralistic society built on international commerce and diversity attracted millions and fascinated the nation.

Even before September 11, the U.S. was ready to embrace the city, for the country had already become much like New York. A huge new wave of immigrants had made the rest of America look and behave much more like Gotham. An internationalization of business practices had tied the national economy tightly to Asia, Europe, and Latin America, echoing New York's. An army of young people from Boise and Duluth, Portland and Cleveland, had joined native New Yorkers in making the city their home, taking jobs in the industries of the growing global economy--finance and media, marketing and law--and leaving nervous parents behind.

Then came the terror attacks that took so many lives, not just from New York but from across America and around the world. The city showed that beneath its glitter and greed there was heroism, selflessness, community, and charity. It was clear that the values that mattered most to America had been nurtured in New York, too. September 11 marked the end of the city's isolation and made it whole with America--perhaps for the first time, long after it had become the world's capital. The World Trade Center tragedy finally brought New York home to America and America home to New York.

A SINGLE PURPOSE. From the beginning, New York showcased the promise and problems of an open global culture. It drew people from around the world with restless ambitions and towering hopes for a new life. In 1624, the Dutch laid down rules that remain to this day. There was one, and only one, central purpose for New York, a secular raison d'être: making money. Since all of the early settlers of New Amsterdam, as it was originally called, were employees of the Dutch West India Company, there was a clear logic to it. To this end, all religions, ethnicities, and races were forever to be tolerated. When Peter Stuyvesant, director general of New Amsterdam, tried to ban Quakers from praying in the city and Jews from entering it, company directors rebuked him, arguing that these people, as well as all New Yorkers, were to be treated not as religious figures but as businessmen. Freedom of religion in America gained support in New York, not merely because it was right but because it made economic sense. Men and women were entitled to pray privately in whatever fashion they chose, but the public arena--the marketplace--would forever be secular. This would make New York the apotheosis of a new modern global culture, the exemplar of pluralism, the epitome of democratic capitalism.

A global city, however, will suffer the exigencies of global events. In the mid-1960s and '70s, New York lost its way. Its manufacturing base was decimated by overseas competition, and the city lost 600,000 factory jobs. Crime rampaged through its dirty streets. Its once-great public schools and colleges began to fail. New York's traditional ideal of tolerance for all was debased, turning into an indulgence of the worst public behavior. Tourists were robbed; residents were mugged. By 1975, the city had fallen into default, and the Daily News was running the headline "Ford To City: Drop Dead."

But then New York came back, as it always has. Financial and business leaders joined together to restructure the city's debt. The streets were made safe again. Welfare rolls were slashed. A new wave of immigration reinvigorated its small businesses. New York reached out to Middle America, bringing in Disney to clean up Times Square and help rescue tourism. The global economy soared, and New York-based advertisers, accountants, designers, lawyers, and investment bankers serviced multinational corporations. Most important, the stock market began a 20-year rise, and Wall Street boomed.

True, there were still problems. The cost of living and doing business in New York remained extremely high. Corporations and their employees felt pressure to disperse and escape to the less-expensive suburbs. Poorer neighborhoods were neglected. The public schools remained a mess, and heavy borrowing to fix bridges and tunnels burdened New York with a groaning debt load.

Yet to most living in New York in the '90s, it was a glorious moment. The city was ascendant and reigned supreme on the global stage. Its capital markets dominated the world, fueling growth, jobs, and prosperity. New electronic media and Silicon Alley attracted a horde of young dot-commers. CEOs competed to be on the boards of ballet and opera companies and the best museums, helping to finance a surge in the arts.

Much of that is now in question. New York will have to turn to its strengths to survive and prosper again. Even though the city was blessed with one of the greatest ports on earth, its keenest advantage was in the financial markets New Yorkers recreated time and again. In 1792, in order to fund the country's first public-federal debt, two dozen brokers and speculators gathered under a buttonwood tree on Wall Street to formalize a system of standard minimum fees for the buying and selling of securities. This was the beginning of the New York Stock Exchange; the market sold U.S. government securities, not for the last time, to British and European investors.

STREAMLINING FINANCE. Two centuries later, Wall Street would hire mathematicians and physicists to break securities down into their derivative parts, thus stripping, reshaping, and streamlining the nature of finance, making it far more efficient and powerful. The securitization of debt instruments allowed them to be sold globally, not just domestically, spreading risk and thereby reducing it. By the 1990s, New York capital markets were the largest and most sophisticated in the world. New York built an equity culture for the entire country, with soaring stock prices generating enormous prosperity for America, Europe, and Asia.

It is no accident that the skyscraper came to define New York. To scrape the sky with the dreams and aspirations of men and women drawn from around the world is to define the very essence of the city. New York is the only metropolis in America that was built to be dense and crowded from birth. Behind a 2,340-foot protective wall that became Wall Street, the Dutch laid out a miniature Amsterdam with a closeness that forced an amazing diversity of nationalities to interact intensely, efficiently, and creatively.

Skyscrapers made it possible to fit even more people into New York. When the first one--the Woolworth Building--was built, in 1913, it held 14,000 people: "The population of a city," said S. Parker Cadman in The Cathedral of Commerce, published in 1917. It symbolized "that spirit of man which, through means of change and barter, binds alien people into unity and space and reduces the hazards of war and bloodshed."

Living high among the clouds is fraught with peril and full of hubris, but it is New York's way. After September 11, people realized that their way of life itself may make them terribly vulnerable. "The city," as E.B.White said in a remarkably prescient essay in 1949, "for the first time in its history is destructible. A single flight of planes no bigger than a wedge of geese can quickly end this island fantasy, burn the towers, crumble the bridges, turn the underground passages into lethal chambers, cremate the millions."

September 11 has struck deep fear in hearts of New Yorkers. Not since the Revolutionary War has the city been so attacked. Businesses are considering dispersing to New Jersey and Connecticut. Transportation to the financial district will take years to fix. The city's tax base will be hit hard as the economy sinks. The streets could once more become unsafe.

Or not. New York has risen, phoenix-like, again and again over the span of its long history. Even in this dark moment, media giants and investment banks are building to the sky, linking their fates and the city's to the currents of a global culture New York knows so well. For if New York is, as Walt Whitman said, a City of the World, that reality will carry it into the future.

By Bruce Nussbaum

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE