Spokane's heritage as a trading and cultural center extends back into the mists of time. During the spring and fall salmon runs, Spokane Falls hosted thousands of visitors arriving to fish and trade. The Spokanes, Coeur d'Alenes, and other early residents served as middlemen, using dried salmon as the medium of exchange for buffalo hides that were only available from east of the Rockies. They traded the buffalo hides for shells, wood-carvings, and other goods from west of the Cascades. The Spokane Falls, which were the end of the line for spawning salmon every summer, served as an early convention center and trade-show location. Tribal historian Pauline Flett tells the story of strange, white-skinned men named Lewis and Clark who arrived at a Nez Perce village in what is now central Idaho and asked why there were no men around. “They're all up at the Spokane Falls, fishing,” they were told.
Lewis and Clark were followed by David Thompson, who established the Spokane House in 1810 as the region became a major source for furs. A city began to grow by the late 19th century, its economy based on a tripod of wood products, agriculture, and mining, powered by water and then by electricity. The city's fortuitous geography led all the northern railroads to pass through it, gathering windows and doors and furniture to ship east and west, along with flour and crackers and cookies and tons of silver, lead, tin, and zinc. Grand Rapids, Michigan, was in a tizzy, fearing that Spokane would overtake them as the nation's furniture capital. It was a well justified fear, since Spokane was already producing half the nation's windows and doors. Gold and silver rushes brought miners with dreams of pulling money out of the ground and farmers and lumbermen who dreamed of supplying the food and buildings for the miners and the now-established city of Spokane.
The new city was on the cutting edge of technology, installing electric streetlights in 1885, shortly after New York City and before older and larger cities in the West. Hydraulic and hydroelectric power ran mills carving lumber, grinding grain, smelting and processing metal. These three industries, wood products, agriculture, and mining, grew and shipped their products to the world via five transcontinental railroads. Factories for automobiles, aircraft, farm equipment, and boats set up shop here. The city was poised to rival Denver as the major city of the inland West, making whatever people wanted: beer, bicycles, boots, books, cigars, clothing, cookies, crackers, flour, lumber, packaged meat and poultry, milk and ice cream, wooden matches, refined oil products, steel, nails, bolts, screws, and even motion pictures. Much of what was made in the highly touted “manufacturing center of the Great Northwest” was sold outside of the region, bringing home dollars that were invested in further economic growth. Spokane also became the natural distribution center for the region stretching from the Cascades to the Great Plains. The city's population grew from 36,848 in 1900 to 104,402 in 1910. It was during these booming years that Marshall-Wells (eventually known as Jensen-Byrd) built its huge hardware-distribution facility in the tangle of railroad yards on Main Avenue east of downtown. Massive investment, much of it from New York, Boston, and Amsterdam, brought irrigation to the Spokane Valley and drove railroad spurs to the mining camps and lumber and farm towns throughout the region.
The End of the Boom
Spokane had the arrogance of youth, producing the Northwest's very-first major exposition in 1890, just a year after a colossal fire that had destroyed the city's core. Portland and Seattle would not host their first world's fairs until 1905 and 1909. In 1920, Spokane introduced “the greatest exposition of out-of-door life in the United States,” recognizing the city's location amid a plethora of natural wonders that were being preserved by a series of national and state parks.
The railroads, the mines, the lumber camps, and the farms and ranches drew people from all over the world, turning the city into a melting pot that included Chinese, Japanese, African-Americans, Russians, Germans, Poles, Czechs, Finns, Irish, Scots, Italians, French, Cornishmen, Basques, and Greeks, as well as Salish speakers.
Capital flowed in from New York, Philadelphia, Montreal, London, and Amsterdam. Herman A. Van Valkenberg raised today's equivalent of $218 million from investors in Holland to fund companies here. Spokane's products found a worldwide market. Flour from the Centennial Mills went around the Horn all the way to England.
And then something happened. The details are unimportant, but the results are clear. Young dreamers like Henry J. Kaiser found themselves fleeing town to make their fortunes elsewhere. While the smaller and more isolated city of Boise built five Fortune 500-size companies (Albertson's, Morrison-Knudsen/Washington Group, Boise Cascade, JR Simplot, and most recently Micron Technology), Spokane built none. Spokane's largest employer until its recent implosion was none other than Henry J's Kaiser Aluminum--founded in California, along with chemical, cement, construction, and automobile companies, to name just a few of over 100 companies he started.
It seemed as if preservation of wealth had become more important than creation of wealth. Protection of each slice of the meager economic pie had become more important than growing the pie. Opportunity was just the name of a nearby township and a hope for dreamers. Vision was something to be corrected by Tom E. Day Optician.
Investment capital became scarce (with the odd exception of the most risky investments of all, speculative mining stocks). This led directly to a long period of stagnation. After a proposal in the 1920s by the Spokane Chamber of Commerce to raise just $175,000 to underwrite factories in the then-prospering farm-equipment industry was dropped, once-prosperous manufacturers like the Spokane Harvester Works either collapsed or moved to more welcoming cities. These factories, which also made other machines such as automatic track-layers, were positioned to take advantage of the transition from horse-drawn equipment to diesel and internal combustion engines, which could also have been manufactured locally and would have easily powered trucks used initially for farm-to-market purposes and then for interstate trucking and railroad use. But all this potential was squandered. Nearly the entire industry disappeared.
A New Hope
The economy plugged along, supported by its tripod, while people complained of a brain drain. As the 1960s turned into the 1970s, a new hope began to grow as Expo '74 brought the world to Spokane's door. John Van Der Zee wrote about it in the New York Times:
Such a scene--a torrent of fishable, perhaps drinkable, mountain water pouring through a city of nearly 200,000 people--seems foreign, Swiss, perhaps. The river is to Expo '74 what striking architecture has been to some of the famous world's fairs in the past. It is Expo's thematic realization, its most spectacular show and its greatest achievement.
The time seemed ripe for a transition from a parochial, regional hub riding on century-old laurels to a visionary community making a virtue of its oddly European flair. New thinkers arrived with every planeload, including a young architect, partial to bow ties, named Bill McDonough, who took Expo's theme--“Celebrating Tomorrow's Fresh New Environment”--to heart. (The quote from Chief Seattle emblazoned on the wall of the US Pavilion had an equal impact: “The Earth does not belong to Man; Man belongs to the Earth.”) Thirty years later, McDonough is in charge of a multibillion-dollar project to turn Ford's massive River Rouge facility into a haven for wildlife where cars are also built. At the fair, McDonough participated in a series of symposia and special events that covered energy, population, agriculture, health, human settlements, resource management, recycling, municipal ecology, women and the environment, solid waste management, environmental law, and environmental education. Nobel laureate Wassily Leontief was on the advisory committee. And yet local leaders were scarce at these events.
For six months, Spokane was home to performers from around the world recruited by Mike Kobluk, a former member of the Chad Mitchell Trio, which had given John Denver his start. He filled countless stages with whirling dervishes, Jamaican steel-drum bands, world-class symphonies, ballets, Bob Hope, Ella Fitzgerald--and John Denver. The Folklife Festival, organized by an import from the Smithsonian Institution named Bob Glatzer, found everything from a traditional Chinese fighting kite maker to a Makah Indian carving a 40-foot ocean-going canoe. For six months, Spokane was an international city filled with educational, scientific, and cultural opportunities that could have formed the basis for creative renaissance.
Through its own efforts, the city had blazed a glorious trail to opportunity, but soon lost sight of it in the aftermath of the fair. Visions of hosting the regional headquarters of the National Park Service and making the Spokane Falls and river gorge into a national monument drifted away. The creative renaissance was lost just as the city's grand old schools were torn down, replaced by squat, dingy, cookie-cutter factories for learning whose only color was in a quickly fading rainbow painted on the side.
The fair's only legacy was physical: a beautiful park along the river where railroad yards had once been. The city's goals had been met. The goals did not include being a scientific, cultural, or technological mecca. The city went back to its tripod and continued on its risk-averse, slow, but steady course.
By the end of the 1970s Spokane reverted to its self-image as an isolated backwater where nothing ever happened, which was still a great place to raise kids.
It was hard for those kids to believe that Spokane's early days had been a time of ferment, filled with cross-pollination of cultures, including not just Anglo-American settlers from back East and the local tribes, but also Chinese, Japanese, German, Italian, Irish, and other immigrants. Freed slaves and their descendants migrated here after the Civil War seeking the opportunity to build their lives and businesses in peace. In fact, nearly everyone, including many of the American Indians, came here from somewhere else, bringing with them new ways of thinking and doing. Almost anything you could think of was made right here, including cars and airplanes and movies. The city had been nationally recognized for its creativity and fast economic growth.
The Root of the Problem
That early boom had ended by the 1930s. The best silver mines had been claimed. The founders of the major businesses had died or retired. Few of them had created public companies that would survive in the long term. Their risk-averse survivors leaned toward T-bills and property ownership in their investment portfolios, generally uninterested in running a business or funding startup companies that might fail--not a bad strategy, but not a strategy that would build the region's economy. Over the next half-century, the economy stagnated while other, similar areas, including Boise and Colorado Springs, boomed. Every major Spokane bank and manufacturing business was sold to outside interests. Major airlines that had once used Spokane as a minor hub were inclined to make Spokane a flyover city, or at best a feeder to their hubs elsewhere. Meanwhile Denver, Kansas City, Phoenix, and even Reno established their own airlines to ensure easy access to other markets. Safeway moved its northwest regional headquarters to Seattle. Hardly anyone noticed. A locally initiated venture fund was finally established, but it cautiously set investment criteria so strict that no local startup was likely to be funded until it was already successful. The problem was not so much with the fund's devotion to prudent choices as with the lack of significant alternative sources of funding. Promising opportunities died on the vine.
During the Internet boom of the late 1990s, hope began to rise once more, only to be dashed during the ensuing bust. The lesson could have been learned that one out of a handful of local startups had managed to be sold for over $300 million (in a possibly premature deal that may have left hundreds of millions more on the table)--beating the track records of the best venture capitalists in terms of successes per attempts--but it was overlooked in an obsession with the other setbacks: hundreds of employees at other companies were laid off with the sense that there was nothing we could do about it.
A New New Hope
But now the tide has turned. More and more people, some who moved here from elsewhere, some who went away and came back, and others who never left, are starting to see a positive future where an expanding pie gives bigger and bigger slices to everyone, even the poorest of the poor. New tools are being developed to help new businesses start and grow, and the toolbox is beginning to fill. People are conversing in new languages once rarely heard here: Russian, Japanese, Chinese, Spanish, Hebrew, Hindi and Urdu. Immigrants from countries like Morocco, Thailand, Peru, and Brazil are making their homes here, joining newcomers from six continents. Our worldwide legacy lives on as far away as the Kingdom of Tonga, where a German expatriate advisor to the King immediately knows what's memorable about the home of a visitor: “Ah yes, Expo '74!”
So we have momentum: a plethora of organizations have been formed or modified their missions to help startups. Technet's bootcamp series, initiated with the help of EFGN, is now being collaboratively recast by three university entrepreneurship programs--none of which existed five years ago. SIRTI is barely ten years old. Technet's Catalyst awards, the Chamber's Agora Awards, and Launchpad's Entrepreneur of the Year Award all recognize startups that are building the economy of the future. WSU and UI are actively hoping to license technologies developed by their faculty and staff, and all the area colleges are beginning to collaborate more closely with the Pacific Northwest National Laboratory, a hotbed of research and patent production. AHANA is working to build minority businesses. The EDC's mission has been modified to allow it to work with Spokane-based companies, which had been prohibited before. SNEDA, NWBDA, the SBIR and WTC programs, and other government-funded organizations provide potential sources of cash for startups. Connect Northwest is setting out to build networks between startups and service providers, helping company founders polish their buisiness plans and possibly find funding.
The Phoenix Project promises to put these various people together and add new tools to the toolbox, so that our region's natural creativity can thrive.
Next ::::> Over Coming Obstacles to Economic Growth