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When The Banks Killed Cleveland, Ohio
Once upon a time, Cleveland, Ohio was called "The Best Location in the Nation." Would you believe that' It was once the 7th-largest city in the nation, population-wise, and was a booming industrial town. It has always puzzled me that Cleveland went from a success story to being "The Mistake by the Lake." What leads to the near-demise of a wealthy, major metropolitan city' Well, I've finally done my research, and it's a tangled, intricate web of corruption and blackmail. Stick with me - this is not a history lesson, it's the story of a place where thousands of people's ancestors dug in their roots, confident in a place that they never could have foreseen would fall into dirty hands.In the late 1800's, John D. Rockefeller made his fortune in oil in Cleveland through his company Standard Oil - which, at its peak, held 90% of the kerosene market. This basically put Cleveland on the map. The rairoad system and the Ohio and Erie Canal gave Cleveland the opportunity to become a major player in the steel and maufactured goods industries. A century and a half later, Cleveland was still thriving. The Indians won the World Series in baseball in 1948, followed by the Browns dominating football for about a decade. This was when Ohio newspapers and the Chamber of Commerce tagged Cleveland as "The Best Location in the Nation." In 1950, Cleveland's population was at its highest ever, at 914,808, becoming the 7th largest city in the U.S. But by the year 2000, the population had dropped to 478,403 people, and was only the 33rd largest city in the nation. Why would a city's population decrease by more than half in half a century' We're getting there.
In 1952, Alan Freed, a Cleveland radio DJ, coined the term "Rock 'n Roll," and the first rock n' roll concert ("The Moondog Coronation Ball") was held in Cleveland. The city was on a high and doing well, but a year later, the downward slope began.
From 1953 to 1962, the city put the majority of its urban renewal efforts into Erieview, a square-mile area downtown on the lakefront. Fairly generous funds were offered to big cities around that time by the federal government, for building and improvement. And as Cleveland is now notorious for doing, it channeled all of its renovations into one concentrated area - Erieview - ignoring surrounding neighborhoods that were poor, on welfare, and becoming slums. The mayor at the time, Anthony J. Celebreeze, was the "brains" behind this decision. But even Erieview itself became a disappointment: shortly after the opening of a 990-unit luxury apartment complex within the project, its developers defaulted on their mortgage payments. The project's first building was called a "piece of tin" and a "block of nothing" by Cleveland's Fine Arts Advisory Committee. It wasn't until the 1980's, when the Galleria and several new structures were built, that the area was anything near the attraction it was meant to be. But by then, business suffered. The "Top of the Town" restaurant in Erieview Tower, which offered diners a full view of Cleveland's skyline, closed in 1995. Erieview Park, the amusement park and beach there for more than 60 years, closed in October of 2006.
But back to where we were. In 1968, just two years after the Hough Riots - which had created enough unrest among citizens already - there was another major riot. In Glenville, another suburb of Cleveland, a shootout with police ensued that left three policemen dead and wounded a dozen more. This sparked the riot itself which lasted for several hours. Following this disaster, the leader of a local black nationalists group was found to have bought guns for himself and fellow nationalists from money given to him by the mayor (Carl B. Stokes, the first black mayor of a metropolitan city). Furthermore, the funds Stokes gave him had come from CLEVELAND NOW, a $4 million project the city had raised to help community activities that federal money would not fund. Stokes eventually left town, became a TV broadcaster in New York, and left City Hall with a $13.5 million cash debt. The city had become racially divided. Downtown was deteriorating.
By 1969, the Palace Theater, which was the last operating movie theatre on Playhouse Square downtown, had closed. The Cuyahoga River, polluted and ignored, caught on fire twice in five years: the 1952 fire caused over 1.5 million dollars in damage, and the 1969 fire caused about $50,000 worth of damage. These were not even the first fires; the same river had blazed eight times before this, between 1868 and 1948. But it was the 1969 fire that attracted national attention, and it was then that comedians and newspapers nationwide began calling Cleveland "The Mistake by the Lake." It was plastered all over the media and worked into stand-up routines everywhere. Clevelanders were humiliated. Euclid Beach, another popular attraction, closed that year.
Mayor Ralph Perk (1971-77), instead of making a decision in the interest of the econmy, had short-term bond funds from the federal government issued to Cleveland for financing the city's operating expenses. It quadrupled Cleveland's short-term debt. The next mayor, Dennis Kucinich, was left with $52 million in missing bond funds to address. And now it gets messier. While Cleveland's bond rating dropped (and was eventually suspended altogether), Cleveland Trust Company bank and Councilman George Forbes blackmailed the city. They told Kucinich that the banks would roll over the city's debt and provide $50 million in credit if Cleveland sold MUNY, the city's Municipal Electric Light Corporation. But if Kucinich didn't agree, the bank would extend no further credit to Cleveland, and would make it official that Cleveland had defaulted on their loans.
MUNY Electric was important to Cleveland. It was the city's own power system, created in 1905, that became a competitor to the private Cleveland Electric Illuminating Company (CEI), which was much more expensive. CEI was a constant obstacle, lobbying the city council not to maintain MUNY facilities, causing regular power outages to MUNY customers, and launching aggressive campaigns to lure their customers away. The banks - and the businesses that dealt with them - tried to force the sale of MUNY, so that CEI could have a monopoly on Cleveland's electricity. Kucinich fought for MUNY before Congress, stating that "the decisions of the banks concerning extension of credit to the city [are]...influenced by massive conflicts between the banks' loan-making functions and their direct and indirect ties to other interests in the Cleveland area."
The banks had loans to CEI, shared stock with them, and managed their pension plan; they had huge interest in the company. And because MUNY was a publicly-owned utility, it did not have to pay dividends and could offer their customers lower rates than CEI - both CEI and the banks would profit if MUNY was gone. But Kucinich was accurately representing the people in refusing to sell MUNY: voters actually agreed to raise the city's income tax by 50% , but would still not vote to sell the public utility.
The Cleveland Barons played their last hockey game at the Arena in 1973. Although they were briefly resurrected, and then replaced by the Cleveland Lumberjacks and the soon-to-be Lake Erie Monsters, the following was never the same, and Cleveland lost their stake in the hockey craze that surrounding cities and states still profit from.
In 1978, Cleveland became the first major American city to default on its obligations since the Depression. Specifically, the city was unable to pay 15.5 million dollars in short-term loans from local banks. The default, however, was well-calculated: CEI forced the city to pay all of it's bills in full. The financial hit resulted in Cleveland being unable to meet the payments on their loans to the bank. Because of their low bond status, they were dependent on the bank's loans. Expecting this, the banks offered the bribe that a) the city would have more time to pay their debts and b) get additional credit extended - if they would sell MUNY Electric. The ultimatum was that either Cleveland sold it's pubic utility company, or they would be in default. Cleveland was in more than $30 million in debt, but Kucinich refused to give in and sell MUNY, and so Cleveland went officially broke, and remained in default status with the banks for almost a decade. But the next mayor, Voinovich, was backed by the banks. Though they failed to overtake MUNY electricity, they succeeded in punishing the working class through unemployment, lowered wages, and higher taxes - and obtaining influence in the government.
Cuyahoga Works of United States Steel closed in 1984.
In 1975, the Regional Transit Authority (the RTA bus system) was established, which heavily assisted Cleveland's financial state. In 1987 - the year after it was announced that Cleveland would be the site for the Rock and Roll Hall of Fame - Cleveland emerged from its default status with the banks. Though it has overcome its debt to financial institutions, the city is still not out of the water.
By 1996, the Cleveland Browns football team was "deactivated" for three years. LTV Steel Company in Cleveland, which used to be the 3rd largest steelmaker in the country, closed their steel mills in Cleveland in the new milennium, causing more than 3,000 people in the city to lose their jobs. Michael White, Mayor from 1989 to 2001, showed promise redeveloping with Jacob's Field and the Quicken Loans Arena, but later was found to have allegedly been accepting bribes from one of his associates in exchange for construction and parking contracts, and brought further mistrust to the city. He is currently under investigation by federal prosecutors.
Classics, a popular 4-star restaurant at the Omni International Hotel, closed in 1999. The Riverview Room at the Ritz Carlton, another of Cleveland's few 4-star restaurants, closed in 2000.
It wasn't until 2001 that Ohio opened its market to electric competition, but the electricity monopoly hasn't ended: the electric companies still operate by territories, and customers have little - if any - choice.
In 2005, Mayor Jane Campbell came up with a plan for aiding Cleveland's finances: installing red-light cameras at some of the city's biggests intersections to photograph cars that run the red lights. She expected the city to collect an additional $6 million in fines. But she was attempting to get the funds from the residents, who were already suffering, instead of boosting tourism. The traffic light cameras were installed, but her tenure as mayor was uneventful, and she lost the 2005 mayoral election to Cleveland City Council President Frank G. Jackson, who is the mayor of Cleveland today.
Cleveland is now facing what has been dubbed (and not so politically-correct, I might add) as "white flight": the upper and middle class are retreating to the suburbs, and the heart of the city itself is being occupied more and more by the impoverished. Theft, crime, and vandalism therefore plague the city, stalling the semi-recovery Cleveland saw in the 80's and 90's. Although many suburbians make their way downtown for their 9 to 5 jobs, downtown Cleveland has otherwise become a skeleton of the industrial giant it once was. The Rock and Roll Hall of Fame and the Cleveland Browns Stadium have failed to bring in the revenue or tourism that were expected, and the school systems remain in the state's "academic emergency" rating.
I'll tell you who is not suffering, though. The most prominent buildings in downtown Cleveland are the banks. They hold all of the city's wealth, while the working class is too consumed with having to meet the demands of their own jobs, working to survive. The middle and even upper class are bogged down with commuting to work, putting in a full day's efforts, and commuting home, so much so that it is a struggle to squeeze in a personal or social life, let alone take action against the direction of the city (or even be fully aware of it).
Although Cleveland has been affected deeply both by its own misfortunes and the economic changes in the country itself, this is not the only city facing this sort of struggle:
Highest Jobless Rate Among Large Areas, April 2006-2007
Detroit-Warren-Livonia, Michigan: 6.7%
Cleveland-Elyria-Mentor, Ohio: 5.4%
Milwaukee-Waukesha-West Allis, Wisconsin: 5.3%
Most Jobs Lost in Large Areas, April 2006-2007
Detroit-Warren-Livonia, Michigan: 32,600 jobs lost
Youngstown-Warren-Boardman, Ohio/Pennsylvania: 4,800 jobs lost
Cleveland-Elyria-Mentor, Ohio: 4,100 jobs lost
Largest Percentage Decreases in Employment, April 2006-2007
Monroe, Michigan: -5.2%
Anderson, Indiana: -3.9%
Atlantic City, New Jersey: -2.3%
Elkhart-Goshen, Indiana: -2.2%
Janesville, Wisconsin: -2.1%
Lima, Ohio: -2.1%
Those figures are all from the May 30,2007 press release by the Bureau of Labor Statistics - so, however much faith you place in that. I tend to believe that it's always worse than what the government tells us...they don't exactly have a good recent history of being truthful with us. Regardless, it is obvious that metropolitan areas that relied on manufacturing, the auto industry, and steel are suffering. What is the answer'
Cleveland has relied on its manufacturing, the steel industry, and the oil industry for income since its foundation. The majority of these jobs are gone, whether out of state, or largely, out of the country. A college education was not a prerequisite for most of these jobs. Although higher education poses a likely solution to many of Cleveland's shortcomings, it seems out of reach: the less income residents have, the fewer school levies will pass, because residents cannot reasonably afford the increase in taxes.
This is just one writer's opinion, but I have done a lot of research on this...and, hell, I've only lived in one of these areas for 26 years:
How to Make a Difference
1) First and foremost: Get your money out of the big banks. The more the wealth is concentrated into these monopolistic outfits, the more cards are placed in their hands...and obviously they are using this to benefit themselves, while letting the establishments around them helplessly crumble. There is little to no difference to you to close your account with the big bank, and transfer your funds to a local-based bank or credit union. Same checks, same credit/debit cards, same theory. Except that you are supporting local businesses instead of feeding the multi-billion dollar, greedy nationwide banking establishments. They are holding all of our wealth.
2) Support the small businesses. Sure, a bottle of ketchup may be $4 at the little Mom & Pop store, and you can get it for $2.75 down at the giant supermarket. But when times get tough, it is the big businesses that abandon us. If you slightly alter your routine, and start making your purchases at the independent grocery stores, gas stations, hardware stores, barbers, florists, what-have-you...you are doing far more than you think. Which cause is more important to you' If the answer is your own hometown, then chalk the possible price difference up to a little bit of charity, and make a change.
3) Check where items are manufactured before you purchase them! It is such a small effort, but would make such a huge difference if you did it. Do you just laugh at the fact that almost everything we buy has "Made in China" printed at the bottom' You check calories, ingredients, brands, prices...why aren't you checking for "Made in the U.S.A," "Made in America," "Made in NJ," or NY, IN, PA, OH...anywhere in the States' Do you support all of our business and manufacturing going overseas' Few people realize just how much we now rely on China, when instead we should be focusing on saving our own industries. Start flipping over every object before you buy it, and check the small print to see where it was manufactured.
4) Vote, vote, VOTE and don't stop there. Keep pressure on the politicians to represent the people accurately; after all, this is YOUR government. Send e-mails or letters when they are doing things that you do not agree with, and if it is an issue you feel strongly about, let them know that it will affect whether you would re-elect them in the future. Your voice absolutely makes a difference. And remember, there are other options besides the Democrat and Republican parties. Check out the Libertarian Party or the Independent American Party...know all of your options before making it to the polls. It is everyone's responsibility, and if you don't do it, who will' Remember that it is YOUR government. The mayors and the politicans are supposed to be accurately representing YOU. When the corruption extends beyond what you are even aware of, something needs to change .
"Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it's the only thing that ever does." -Margaret Mead