From blast furnaces to banks: development of credit sector in traditional industrial centres of the USA (the 1980s – early 2010s)

Abstract

Since the middle of the XX century many countries have gradually entered postindustrial period of their economic and social evolution. Although basically positive and understandable, such transformation produced various problems for many cities and regions where traditional heavy industries were predominant. Alternatively, postindustrial challenges stimulated activities in other sectors of local economies, including banking and finance. The paper is focused on four typical examples located in the northern parts of theUSA, namely cities ofBuffalo,Cleveland,DetroitandPittsburgh. For many decades those cities were famous for their staple industries, like steel manufacturing, oil refining and motor-car construction. As early as in the 1950s, many of such enterprises faced growing competition from factories sited in other regions of theUSAand abroad. Predictably, for all the named cities it meant acute budget problems, rapid depopulation, etc. Nevertheless, due to their former industrial might those cities were also homes for large baking corporations. Under new conditions banks (as taxpayers and creators of new jobs) could play a stabilizing role in local economies. Another turning point came in the early 1980s when the Reagan administration initiated neoconservative reforms in the US economy, including banking sphere. Earlier restrictions like prohibition for inter-state branching were repealed step by step, and several banks (including those located in traditional industrial centres) could grow into large supra-regional companies. For all the period from the early 1980s to the present there are large-scale statistical databases, which could be processed for quantitative examination of further developments. The investigation demonstrates that in the 1980s and early 1990s (when theUScredit service was partly liberalized) the role of banks in the four named cities grew remarkably. Meanwhile in 1994 some new rules in federal legislation permitted nation-wide branching for banking corporations. It gave advantages to the largest financial metropolises, especially toNew York. As a result, the collective share of the four above-mentioned cities declined after its peak in the mid-1990s. In the late 2000s and early 2010s one can see its growth again (due toPittsburghespecially), which evidently shows that traditional industrial centres may also perform as large financial nodes.