How does a community's economic development become a civic responsibility?

In classical free-market economic theory, the "invisible hand" operates best when each person pursues their own best interests to maximize and distribute benefits. Therefore, the economy should be as free as possible from government interference. In practice, however, at all levels, the economy requires a public-private partnership to function. Debate over how much government and how unrestricted the private sector highlights challenges to the free market system.

Iowa and Competing Economic Philosophies

Iowa was first opened for U.S. settlement in the mid-19th century when two political parties with competing economic philosophies contended for power. The Democrats tended to represent small farmers who wanted minimal government interference and the lowest possible tax assessments. The Whigs tended to support government encouragement of economic growth through internal improvements like roads, support for a strong banking system and tariffs to protect American industries. Party lines in Iowa were not always in line with national leaders. Local communities benefited from the construction and maintenance of roads. There was strong support for federal land grants in the 1850s to railroads to four trunk lines from the Mississippi to the Missouri rivers. However, too many Iowans feared the power and instability of banks, and the first state constitution put strict restrictions on this aspect of the free enterprise system.

How one made money in a small town was not the only factor in the early equation. In many situations, improvements in living conditions depended upon community action outside of government. Churches, private schools beyond what the one-room school offered and social life were collective actions of the community, not the government. No matter how much an individual family earned, they could not enjoy a quality lifestyle if their community did not offer the desired opportunities. Civic engagement in addition to government activity was essential. That sometime meant volunteering and sometimes meant contributing financially to community events and projects.

Public-Private Partnership

Today, public and private initiatives are essential to maintain a healthy economy. Commerce cannot run without a solid infrastructure of roads and airports that the government maintains. In Iowa, community colleges train students at government expense to prepare for jobs in private industry. Government agencies match those looking for work with firms that want to hire them through workforce development programs and even provide direct grants or tax incentives to businesses that relocate in the state.

On the private side, local economic development organizations supported by public and private donations work hard to lure and retain private businesses. Local communities provide building sites and offer to expand utility services to new factories or office buildings. Development organizations promote quality in local schools, safety and recreation opportunities that will encourage business executives to think positively about the community.

How much should the government use taxpayer money to benefit private businesses? Why should private citizens invest their own money to support businesses in their communities? The answers lie in the close connection between the desire for quality of life amenities and the necessity for collective action to sustain them. Sometimes they can be achieved only through government action. Sometimes, it is more appropriate to work for them through private organizations. The dividing line between the two approaches has always been a point of controversy.

Supporting Questions

What geographic factors contribute to community growth and economic development?

• Iowa Patriot Letter about Important Rivers for Settlement, July 18, 1839 (Document)
• Iowa and Wisconsin Territories Map, 1842 (Map)
• Des Moines Rapids of the Mississippi River Map, 1843 (Map)
• "Engineer's Report" in The Davenport Gazette, January 9, 1851 (Document)
• "Council Bluffs & Saint Joseph Railroad - Letter from M. Jeff Thompson, of St. Joseph," May 22, 1858 (Document)
• Bird's-Eye View of Council Bluffs in Pottawattamie County, Iowa, 1868 (Map)
• "Illustrated Historical Atlas of the State of Iowa," 1875 (Image)

How does economic activity affect community growth?

• Sectional Map of Iowa, 1850 (Map)
• Population in Iowa in 1850 and 1860 U.S. Censuses, 1853/1864 (Document)
• "Stock in the M. & I.C.R.R.," February 24, 1854 (Document)
• "Railroad Jubilee at Rock Island," February 24, 1854 (Document)
• Parker's Sectional and Geological Map of Iowa, 1856 (Map)
• "River Items" Newspaper Article about Council Bluffs, Iowa, June 6, 1857 (Document)
• "Daily Southern Mail," June 20, 1857 (Document)

How can governments assist with a community’s economic growth?

• "Navigation of Mississippi River" Petition, January 18, 1836 (Document)
• "Davenport and Council Bluffs Railroad," December 20, 1849 (Document)
• "The Railroad" Newspaper Article, December 20, 1849 (Document)
• "Railroad Loan" Newspaper Article, June 6, 1857 (Document)
• "Mississippi and Missouri Railroad" Newspaper Article Part 1, June 20, 1857 (Document)

What civic responsibility do individuals have to assist with a community’s economic growth?

• "Local Matters - Important Railroad Meeting" Newspaper Article, February 24, 1854 (Document)
• "The Railroad Loan" Newspaper Article, June 6,1857 (Document)
• "Mississippi and Missouri Railroad" Newspaper Article Part 2, June 20, 1857 (Document)
• "Railroad Meeting in Saratoga" Newspaper Article, May 22, 1858 (Document)