- Emmanuel Mehr
B&O to Inner Harbor: Building Baltimore through Public-Private Partnerships — Part Two
BHW 56: February 24, 2024
From the incorporation of the Baltimore & Ohio Railroad (B&O) in early 1827 until its construction reached the Ohio River, public and private investors largely worked together toward the shared goal of infrastructural expansion. Once the initial objective of reaching the Ohio was met in the early 1850s, B&O private interests moved to seize greater control of and profit from the company. [2] In the late 1950s and early 1960s, Baltimore’s Charles Center development project achieved its immediate design and investment goals. While its long-term success was prevented by the consumer behavior shift away from downtown department stores toward suburban big-box stores in the late twentieth century, its initial successes reinvigorated Baltimore’s urban landscape. Looking back on the project years later, the city’s physical development director Mark K. Joseph deemed Charles Center “the bridge to the Inner Harbor.” He continued, “No one would have believed in the harbor plans without Charles Center.” [3] Local leaders leveraged this renewed confidence in Baltimore’s downtown core to shift away from the primarily private funding of Charles Center. Starting in the 1960s, they redeveloped the Inner Harbor through a public-private partnership (PPP) with immense public funding. To justify this, they framed the project as serving the interests of all Baltimoreans. [4] The expansion of the B&O throughout the 1830s and 1840s was similarly framed as in the interests of all Baltimoreans. A well-articulated goal of the railroad was economic revitalization, which would justify the usage of Baltimore and Maryland taxpayer dollars by improving the public’s lives. [5] However, strengthened private interests on the B&O board ensured the company increasingly neglected Baltimoreans while paying large dividends to private shareholders. [6] Comparably, the Inner Harbor project neglected and disinvested in Baltimoreans while economically benefiting private investors. [7]
On July 4, 1828, Baltimoreans came together for a grand ceremony celebrating the PPP that launched the B&O’s westward expansion. Attending City Council members and B&O executives represented the railroad’s public and private interests, respectively. The great public turnout at the celebration symbolized that the B&O was to benefit all Baltimoreans. [8] Historian John F. Stover establishes the civic mood of the day well, writing: “There was an unprecedented bustle through the city that Friday morning for it was to be a very special Independence Day for Baltimore . . . All had been busy in preparing for the Baltimore and Ohio parade.” [9] Locals watched with great excitement as the B&O’s “first stone” was laid. [10] The parade that followed ended at a rail platform near the city’s western edge. From this platform, Baltimoreans were encouraged to visualize a magnificent B&O steam locomotive roaring off into the distance to bolster their city’s economy. [11]
A December 1963 article in Time magazine identified the problem Charles Center sought to address, stating: “Many a modern city is suffering from an epidemic known as the Downtown Disease, or Business Center Blight. There are three courses of treatment: 1) rerouting traffic away from the central business district; 2) cutting off vehicular traffic altogether . . . 3) performing major surgery known as ‘making a mall.” [12] The demolition and reconstruction that characterized the Charles Center project embodied this third option. Two months prior to the Time article, a Virginia newspaper reported on the progress of the project: “Charles Center, downtown Baltimore’s pride and joy, got admiring glances Saturday from architects attending a Middle Atlantic Conference on Urban Esthetics in nearby Annapolis . . . the downtown business complex has prospered in the relatively short space of five years.” Looking forward to a promising future, the report continued, “Still to come: a new hotel, a federal office building, more office buildings of varying heights, two apartments and a theater.” [13] As corporate professionals, these impressed architects represent Charles Center’s target audience. It was to encourage corporate investment in Baltimore. Its success in doing so was evident as early as January 1963, when the Evening Sun reported: “The Vermont Federal Savings and Loan Association unveiled plans today for a seven-story, $1,500,000 building in Charles Center.” [14] From the start of the project, members of the Greater Baltimore Committee and the city’s urban planning department anticipated that buildings like this one would bring lucrative return on investment.
Throughout the Charles Center planning and development process, its leaders made clear that this was the first stage in a long-term urban revitalization project that would also include remaking the waterfront. [15] An internal city report from May 1965 put this simply, stating: “The needs of a once-declining downtown are being met by the revitalizing influence of Charles Center. The Inner Harbor project will continue the process.” [16] Corporate documents also framed the Inner Harbor redevelopment as a continuation of Charles Center. For example, a 1972 report by the American Oil Company asserted: “[T]his development represents the first phase of a 30-year master plan to pump new economic, cultural and social opportunities into an area fallen into disrepair through the ravages of time. The second phase of Baltimore’s rejuvenation is the Inner Harbor program, which involves renewal of 240 acres surrounding the harbor basin.” [17] The Inner Harbor’s seemingly boundless potential excited both public and private leaders.
By the time that Theodore R. McKeldin began his second term as mayor of Baltimore in 1963, city leaders publicly emphasized the shift to the Inner Harbor. McKeldin remarked: “The Charles Center, our State Office buildings, the new office and apartment buildings which punctuate our skyline—these are proof in mortar and steel that men of foresight and determination are translating the Baltimore spirit of old into a vibrant new hope for tomorrow.” He also stressed how Charles Center justified greater public sector investment, claiming: “It is my firm belief that within the next ten years, the increased revenue will reimburse us for the initial outlay. We can observe the same process in Charles Center. This is primarily private enterprise, but the City is already assured of a handsome return on its relatively small investment.” Then he asked, “But now that the State and private business are forging ahead, why should the City lag behind?” McKeldin turned directly to the Inner Harbor: “Envision with me, too, a new Inner Harbor area, where the imagination of man can take advantage of a rare gift of Nature to producing an enthralling panorama of office-buildings, parks, high-rise apartments and marinas.” [18] This second inaugural speech set the tone for public funding of Inner Harbor development in the years that followed. By comparison, after the B&O’s initial celebrations private interests demanded greater return on investment at the expense of public benefit. It is striking how external circumstances dictated justifications for more public funding in the Charles Center case as the project developed, whereas in the B&O case as the project developed private interests exerted pressure for profit. It is likely that with Charles Center private interests also encouraged further public investment, citing the project’s economic success as proof of future profit potential.
The B&O’s private investors impatiently awaited the railroad reaching the Ohio River. As historian William Bruce Catton points out: “Stockholders could see the long trains laden with western produce or Allegheny coal trundling into the Baltimore market every day; they read annual reports that showed mounting net revenues. The need to defer dividends was past. The western country had been tapped.” [19] Much public-private B&O investor conflict related to dividends. Put simply, dividends are payments in cash or stock made to shareholders as compensation for company profit. [20] Stockholders demanded that economic success be redistributed through dividends. However, public interests on the B&O board disagreed. They preferred that profits be put toward lowering freight rates and thus bringing greater prosperity to Baltimore and Maryland. Lower freight rates would also economically benefit the Baltimorean people overall by strengthening the city’s economy. [21] This would make up for some of the debts the city and state accumulated due to the railroad. [22] For example, public interests were upset in December 1856 when the B&O board voted to pay a thirty percent dividend rather than reinvesting profits in railroad operations. Reinvestment would benefit the city, state, and populace by minimizing operational costs, whereas dividends benefited private shareholders by providing them with immediate individual economic gain. [23]
After the initial successes of the B&O railroad’s westward expansion from the late 1820s to the early 1850s, private investors demanded greater private profit. Over a century later, in the early 1960s, the largely privately funded Charles Center development achieved its initial investment goals. In this case, both public and private interests cited developmental success to justify public investment in further urban renewal projects. As redevelopment shifted from the privately funded Charles Center to the substantially publicly funded Inner Harbor redevelopment, city and business leaders increasingly framed the project as benefiting all Baltimoreans. However, private investors had an ulterior motive which is analogous to the demand for dividends in the B&O case. They argued that they did their part with Charles Center, and now it was time for public interests to cooperate to ensure greater profits for all parties. Contractors, investors, and other private interests recognized that through PPPs they would greatly benefit from increased public redevelopment funding. The tensions between public and private in both cases provide fascinating insights into the economic operations of American capitalism. Next week’s feature will explore how John W. Garrett’s appointment as B&O president and William D. Schaefer’s election as mayor of Baltimore contributed to these histories of public-private economic development.
[1] Historic American Buildings Survey, “Baltimore & Ohio Railroad Company Headquarters Building, 2 North Charles Street, Baltimore,” photograph (Baltimore, MD, date unknown), Survey number: HABS MD-1122, https://www.loc.gov/item/md1569/.
[2] William Bruce Catton, “John W. Garrett of the Baltimore & Ohio: A Study in Seaport and Railroad Competition, 1820-1874” (PhD diss., Northwestern University, 1959), 63, 147-148, https://www.proquest.com/openview/7b27a9770ac2f7ca7599296c55adef56/1.
[3] Mark K. Joseph, quoted in C. Fraser Smith, William Donald Schaefer: A Political Biography (Baltimore: The Johns Hopkins University Press, 1999), 109, https://archive.org/details/williamdonaldsch00smit.
[4] Jane Berger, A New Working Class: The Legacies of Public-Sector Employment in the Civil Rights Movement (Philadelphia: University of Pennsylvania Press, 2021), 160-161.
[5] See David Schley, Steam City: Railroads, Urban Space, and Corporate Capitalism in Nineteenth-Century Baltimore (Chicago: The University of Chicago Press, 2020), 12, Kindle edition; Sherry H. Olson, Baltimore: The Building of an American City (Baltimore: The Johns Hopkins University Press, 1980), 73-74, https://archive.org/details/baltimorebuildin0000olso.
[6] Kathleen Waters Sander, John W. Garrett and the Baltimore & Ohio Railroad (Baltimore: Johns Hopkins University Press, 2017), 117-118, Kindle edition; Schley, Steam City, 134-137.
[7] See Kweisi Mfume and Ron Stodghill II, No Free Ride: From the Mean Streets to the Mainstream (New York: One World, 1996), 220, https://archive.org/details/nofreeridefromme00mfum; Berger, A New Working Class, 7-9.
[8] Mary P. Ryan, Taking the Land to Make the City: A Bicoastal History of North America (Austin: University of Texas Press, 2019), 22, Kindle edition.
[9] John F. Stover, History of the Baltimore and Ohio Railroad (West Lafayette, IN: Purdue University Press, 1987), 26-27, https://archive.org/details/historyofbaltimo0000stov.
[10] “[Laying the first stone of the Baltimore and Ohio Railroad],” photograph (Baltimore, MD, July 4, 1828), Library of Congress Prints and Photographs Division (Washington, DC), https://www.loc.gov/item/2018654214/; Stover, History of the Baltimore and Ohio, 97.
[11] Ryan, Taking the Land to Make the City, 22.
[12] “Modern Living: The City,” Time, December 14, 1962, 66, https://time.com/vault/issue/1962-12-14/spread/74/.
[13] Raymond L. Bancroft, “Baltimore’s Charles Center: Timidity Gave In to Prosperity,” Virginian-Pilot (Norfolk, VA), October 20, 1963, C-2, https://www.newspapers.com/image/846434065/.
[14] Sheldon Smith, “$1,500,000 S.&L. Unit Set For Charles Center,” Evening Sun (Baltimore, MD), January 15, 1963, B2, https://www.newspapers.com/image/370142715/.
[15] Smith, William Donald Schaefer, 110.
[16] Baltimore Urban Renewal and Housing Agency, “Current Achievements and Status of Baltimore’s Urban Renewal Program, Prepared for Members of the Baltimore City Council,” May 17, 1965, 2, https://archives.ubalt.edu/gbc/pdfs/R0046_GBC_S12_B28_F040.pdf.
[17] “Baltimore’s New Look for a Grand Old Lady,” Amoco Seasons, June-July 1972, American Oil Company, 7, https://archivesspace.ubalt.edu/repositories/2/archival_objects/52343.
[18] Theodore R. McKeldin, “Inaugural Address of Theodore R. McKeldin, Mayor of Baltimore, Second Inauguration,” May 21, 1963, 4-6, https://msa.maryland.gov/megafile/msa/speccol/sc3500/sc3520/001400/001484/pdf/1963inaug.pdf.
[19] Catton, “John W. Garrett of the Baltimore & Ohio,” 147-148.
[20] Merriam-Webster.com Dictionary, s.v. “stock dividend,” accessed November 9, 2023, https://www.merriam-webster.com/dictionary/stock%20dividend.
[21] Stover, History of the Baltimore and Ohio, 94-95.
[22] Matthew A. Crenson, Baltimore: A Political History (Baltimore: Johns Hopkins University Press, 2017), 124, https://archive.org/details/baltimorepolitic0000cren.
[23] Stover, History of the Baltimore and Ohio, 94-95.