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How chambers of commerce helped build the American economy

How chambers of commerce helped build the American economy

By Aspire Economic Development + Chamber Alliance

As we celebrate the nation’s birthday and reflect on its political history and evolution, it is a great time to learn about the history and evolution of America’s chambers of commerce and how they shaped the existing economic system of today.

Chambers of commerce are perhaps some of the most influential institutions in the history of economic development in America. From medieval merchant guilds to colonial privateer fleets and free trade associations, chambers of commerce have a history that mirrors the formation of the modern market economy and that embodies the cultural views of the various local business communities they represented.

Centuries ago, merchants found strength in numbers when they combined into societies and guilds to share trade secrets and economic news in their association circles. Chambers of commerce originally began as extensions of governments to regulate trade and facilitate economic activities into the mercantile age.

Although chambers of commerce were often extensions of the economic interests of colonial European governments, the American colonies would be where these institutions’ roles changed into independent engines of free enterprise.

In 1768, John Cruger helped form the New York Chamber of Commerce and was elected as its first president. The New York Chamber was the first organization of its kind in North America. Unlike chambers in the imperial mercantilist system of Old Europe, the New York Chamber and the chambers in the New World that followed were institutions that wielded economic power largely outside of the controlling sphere of government.

These bastions of anti-tax and free trade advocates would become significant players of the American Independence movement. However, when a war looked like it was on the horizon, many chambers saw this as bad for business.

“During the American Revolution, about two-thirds were loyalists (against independence) and one-third were patriots (for independence),” said Chris Mead, author of The Magicians of Main Street: America and its Chambers of Commerce, 1768-1945. “Among that one-third was the president, John Cruger of the New York Chamber.”

During the War, the hiring of privateers to protect trade routes and plunder enemy ships had become common practice for both patriot and loyalist members of the major chambers of commerce at the time like the New York and Charleston Chambers.

After the political revolution of 1776, there followed an economic and industrial revolution, and chambers of commerce were once again at the forefront of that societal shift. With the newly independent nation building up its economy, business and commercial interests reached the question of whether to focus on trans-Atlantic trade or protect America’s infant industry.

“During the early part of the industrial revolution in the 1830s, there was a debate in the Philadelphia Chamber of Commerce about which direction we wanted to go as a country,” said Mead. “In the direction of free trade and an overseas focus or of limited and protected trade with a domestic focus.”

Mead added that the members of the Philadelphia Chamber who advocated for the domestic focus and protected trade split from the group and formed the Board of Trade to distinguish itself from the chamber of commerce.

Major ideological divides like these are the reason many communities may have multiple civic organizations all called chambers of commerce, commercial clubs and boards of trade competing today.

Chambers of commerce organizations across the country were once again divided along regional and ideological lines when the Civil War broke out in the 1860s. Mead noted that chambers usually fell under whatever was the dominant sentiment of their geographic location with many chambers in the South supporting secession, and many in the North supporting Lincoln’s Union cause.

Chambers of commerce were quick to prioritize economic development once again during the Reconstruction period when the need for development (or redevelopment) was at its most dire. The focus on re-establishing commerce also allowed for healing to take place between North and South and the rebuilding of disbanded chambers of commerce.

“After the war, one of the first resolutions of the recently re-established Charleston Chamber was about building a railroad between Cincinnati and Charleston,” said Mead. “What is the first thought that comes to chambers of commerce after the war? Trade.”

The Greenwood Chamber of Commerce organized in 1954, later merging with the Johnson County Development Corporation in 2020 to form Aspire Economic Development + Chamber Alliance. (Photo courtesy of Aspire Economic Development + Chamber Alliance)

The turn of the century and the years of the First World War saw many business interests across the nation converge and a new unified national direction for the U.S. economy was sought.

The New York Chamber, in its position as the oldest and leading chamber organization in the U.S., led a reform league with many other regional chambers and the American Bankers Association for the creation of a central bank system in the wake of several banking panics in the late 1800s and early 1900s.

In its quest to unify the banking industry it helped create the U.S. Chamber of Commerce a year before the Federal Reserve system would be established.

“The New York Chamber of Commerce had been attempting, in a somewhat convoluted way, to act as a national chamber of commerce would,” wrote Mead in The Magicians of Main Street. “Not surprisingly, once the U.S. Chamber was organized in 1912, the league was dissolved into it. The U.S. Chamber could finish the work of promoting nationwide support for what would be a nationwide banking system.”

Mead mentions in his book, that during World War I, the Indianapolis Chamber of Commerce created the “Indianapolis Plan” for procurement of military contracts which became a model for other chambers around the country.

In the Great Depression of the ‘30s, chambers of commerce were largely strongholds against many of the Roosevelt Administration’s government-heavy approach toward economic issues. However, the Second World War shifted much of the commercial interests of the country into military projects.

The chamber of commerce as we know it today was shaped by the Second World War into decentralized, local and independent business organizations who, at the same time, regularly work alongside governments, support military bases and large coordinated infrastructure projects in their regions.

Indiana’s reputation for its strong pro-business environment has much to do with the history of its own chamber organizations. The earliest chamber organization in Indiana according to Mead’s book appears to have been established in New Albany around 1857.

However, there were several early attempts at forming an Indianapolis Chamber of Commerce dating back to 1853, but one would not be finally established until 1890.

The Commercial Club of Indianapolis was formed in 1890 with Col. Eli Lilly as its founding president and attempted to turn the project of business expansion and retraction into a statistical science rather than merely a marketing campaign.

The early claim to fame for a different organization, the Indianapolis Board of Trade, was during the late 1890s when it became an integral part of the monetary reform movement recruiting Midwestern allies to join with East Coast bankers and chambers in supporting the legislation that would lead to the creation of the modern banking system.

On the Southside of Indianapolis, the Greenwood Chamber of Commerce organized in 1954 and would later merge with the Johnson County Development Corporation in 2020 to form Aspire Economic Development + Chamber Alliance, the chamber of commerce serving all of Johnson County today.

The story of how each chamber of commerce formed in their respective communities will always be unique, however Mead, who has worked with and studied many different chamber organizations around the United States believed that these institutions share an intertwined history and destiny.

“A lot of chambers know about their own history, but not a lot of chambers know about each other’s,” said Mead. “That’s a major reason I wrote this book; to see the interconnections between all these chambers across the country.”

As we celebrate the beginning of the American experiment, we must also acknowledge the role that chambers of commerce have played throughout its history as its testing labs of innovation, economic development, and entrepreneurship.

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