Newark: A Case Study of Agglomeration and Deglomeration

Non-generalizable, Historical, and Natural Resource Factors 

Puritans seeking land with easy access to major waterways on which to establish their own theocracy purchased land along the Passaic River from the Hackensack Indians in May, 1666 to found “New-Ark” or “Our Town on Passaick River” (History of Newark, 2010a, p. 1).  Overly abundant raw materials such as the tamarack tree’s bark for tannin, hides of wild animals for leather, and iron as well as natural resources such as water for drinking, drainage, agriculture, livestock, transportation, and commerce played a crucial role not only in transforming Newark into an industrial center, city, and transportation hub but also pulling several industries to its location.  Leatherworkers were able to quickly develop a collective expertise for shoe and boot production because of their unlimited access to tannin (Hartman & Lewis, 2010) which is essential for tanning leather.  This factor when combined with its minimal transportation costs caused Newark to become a least cost location that pulled in other shoe and boot makers as well as related enterprises. 

Beginning in 1815, Seth Boyden almost single handedly revolutionized leather manufacturing as well as inventing several other products in Newark.  Boyden not only invented patent leather but also improved the leather manufacturing process such that by 1837 Newark had over “155 patent leather manufacturers” (Tuttle, 2009, p. 27) and the concentration of the many formerly small individual leatherworkers had expanded into larger businesses (Hartman & Lewis, 2010) manufacturing a range of top quality shoe, boots, saddles, harnesses, carriages, coaches, lace, and hats.  As a result, Newark was producing “90% of all patent leather in the United States” by 1860 (Tuttle, 2009, p. 27) and almost “90% of the nation’s leather by 1870” (History of Newark, 2010a, p. 1).  

Boyden translated his success with leather into a second industry by leveraging the availability of another raw material, iron.  He created the first malleable iron business in America which was soon renowned for its quality buckles, carriages, ornaments, and harnesses which complemented the leather manufacturing and blacksmithing industries (Tuttle, 2009; Turner, Koles & Cummings, 2003).  Boyden’s innovative leather and malleable iron businesses drew other “weight losing” (Pucher, 2010) businesses to Newark.  These industries benefited greatly from the opening of the Morris Canal in 1831 which they used to meet the increasing industrial and agricultural demands of the hinterlands (History of Newark, 2010a).  By 1834, major railroads further reduced the transportation and communication costs of transporting goods.   

Agglomeration Economies:  Localization

Leather manufacturing businesses initially and iron manufacturing businesses subsequently clustered in Newark because they benefited from both internal and external scale economies primarily as a result of being located in a transportation node.  Easy access to abundant inexpensive raw materials, natural resources, workers, capital, and other production inputs lowered production costs resulting in internal economies of scale.  The more leatherworking enterprises located in Newark, the more these locally clustered firms benefited from external economies such as the sharing of new technologies, a concentrated skilled workforce, enhanced communication, minimal assembly costs, essential specialized goods and services plus easy access to a transportation network.  The localization economy linked the leatherworking enterprises making it easier to increase production (History of Newark, 2010a).  

Being located in a crucial transportation node, the leather industry leveraged the concomitant lower costs but greater speed of its transportation and communication systems to expand its zone of influence throughout the hinterlands.  Newark’s reputation for quality leather products especially shoes and boots quickly spread enabling its goods to be exported along the Atlantic coast especially from the 1780’s to 1820’s.  By the 1820’s sales of its leather products were so successful especially in the South that the nation’s first regularly scheduled weekly shipping between Newark and such major “break-of-bulk points” or “entrepots” (Pucher, 2010) as Savannah and Charlestown caused the “South to largely cede its shoe and boot manufacturing” (Tuttle, 2009, p. 24).  Also, the British blockade during the War of 1812 accelerated the growth of manufacturing within America and especially Newark because as the nation “began producing goods it formerly imported” from Great Britain it became much more “self-sufficient” (Tuttle, 2009, p. 24).  

Newark’s economic advantage as a major transportation hub began its rapid growth in 1765 when it improved and expanded its roads and established ferries to enable its goods to be transported more efficiently over the Hackensack and Passaic Rivers to markets in New York City: “Newark suddenly became the major stopover on the main route connecting the Hudson and Delaware Rivers” (Tuttle, 2009, p. 17).  But the construction of two bridges over the Hackensack and Passaic Rivers in 1795, which largely superseded the ferries, helped Newark to ultimately achieve localization and urbanization economies.  

Agglomeration Economies:  Urbanization

Agglomeration economies that resulted from the spatial concentration of industry and people within Newark led ultimately to the development and growth of Newark as a city.  The more and different kinds of interdependent businesses that were pulled to Newark by its economic advantages, the faster the population increased and the workforce diversified and improved its skills.  The benefits of population agglomeration including the development of improved infrastructure, transportation, communication, and knowledge as well as production input sharing affected all industries because of their proximity.  

The addition of large numbers of immigrants to its diverse skilled labor force, 80% of which were involved in some form of manufacturing, beginning in 1826 helped establish Newark as the regional industrial center (History of Newark, 2010a).  While most of the immigrants worked on the Morris Canal which caused Newark’s population to increase from 8,017 in 1826 to about 105,000 in 1870, only Buffalo’s population growth rate exceeded Newark’s within America due to the construction of the larger Erie Canal (Hartman & Lewis, 2010; Tuttle, 2009).  

Newark leveraged its lower external costs of crowding, congestion, and noise plus its lower cost of doing business combined with skilled labor over New York City to attract not only leading inventors such as Thomas Edison, who invented the stock ticker and electric pen, and John Wesley Hyatt, who invented celluloid for camera film while in Newark, but also other industries.  The number of banks and insurance companies quickly grew to meet the needs of local industries including Mutual Benefit in 1845 and Prudential in 1873. 

Improvements to the sewer system enabled Newark to overcome health and sanitation problems so that it could advance as a major urban residential and commercial center beyond the 1850’s.  Although Newark enjoyed an abundant water supply, its streams and the Passaic River not only provided outlets for refuse, waste, and garbage but also often overflowed onto the city’s streets “posing a serious health hazard” (Modica, 2010, p. 2).  Because the early “common sewers” were “open ditches dug in the middle of the street,” (Modica, 2010, p.3) the first real sewer was completed in 1854 under Broad Street. 

But the need to address major diseases stemming from the lack of sanitation, population growth, and industrial clustering, led Newark to increase its sewers from 4.5 miles in 1858 to 112 miles in 1893 and to 310 miles by 1910 (Modica, 2010; Tuttle, 2009).  The sewers not only enabled more diverse businesses to develop including four major department stores, Hahne & Company, L.S. Plaut, L. Bamberger, and Kresge’s, but also caused many of the employees to become residents and extended the customer base out into what would become the suburbs by the early 1900’s (History of Newark, 2010a).  The sewer system “made the city a viable place to live and work.  Modica (2010, p. 9) explained that without this system, Newark’s residential and industrial growth, from a small village to a modern metropolis, would not have been possible.”    

Deglomeration Diseconomies

Newark’s businesses and population began to deglomerate because of the diseconomies of scale caused by businesses that were burdened beyond their optimal size and excessive population agglomeration.  The excessive clustering of businesses and people led to increasing costs plus negative externalities including congestion, crowding, noise, and the 1967 riots.  Newark lost a major portion of its tax base as middle and upper income residents moved to the suburbs to consume more land which was facilitated by increased modes of transportation and automobile ownership and usage plus improved and expanded rail services, roadways, and highways which combined to lower transportation and commuting costs.  

Because Newark’s population continued to grow by nearly 200,000 people by the end of World War II despite a “Depression-related loss of 13,000 people” (Tuttle, 2009, p. 87) “the city bought the abandoned Morris Canal to accommodate its growing population so that it could build a subway system” (Tuttle, 2009, p. 103).  To try to abate the exodus to the suburbs, Newark worked to rebuild its slums by obtaining “more federal money per capita, and used the funds to flatten entire neighborhoods and build more public-housing units per capita than any city in the country” (Tuttle, 2009, p. 87).  

Newark leveraged its transportation network including the “Port Newark, the major container shipping facility for the Port of New York and New Jersey and the largest on the East Coast, Newark Liberty International Airport,” highways, roadways, and railroads to develop the service and transportation industries necessary to replace its lost manufacturing industries (History of Newark, 2010a, p. 1).  Major investments in cultural, civic, and entertainment developments including the New Jersey Performing Arts Center, Prudential Center, Riverfront Stadium, AirTrain Newark which connected the New York Port Authority to Newark, and University Heights Science Park (History of Newark, 2010) led to increases in the residential population, median income, and real estate prices after 2000 (Tuttle, 2009).  In this way, Newark became the gateway to the “Gateway Region” of industry, commerce, and urbanization (Newark, New Jersey, 2010b, p. 1) because “the city was simply too valuable a hub for transportation and commerce to remain tangled in despair and economic malaise forever” (Tuttle, 2009, p. 210).    


Hartman, D. & Lewis, B. (2010, October 31). A Walk Through Newark: History of Newark. Thirteen/WNET. Retrieved from 

Modica, G. R. (2010, October 31). The History of the Newark Sewer System. All in New Jersey. Retrieved from 

Pucher, J. (2010, November 11). Class notes. New Brunswick, New Jersey: Rutgers University. 

Turner, J., Koles, R. T., & Cummings, C.F. (2003). Newark The Golden Age. Charlestown, SC: Arcadia Publishing. 

Tuttle, B. R. (2009). How Newark Became Newark: The Rise, Fall, and Rebirth of an American City. New Brunswick, New Jersey: Rutgers University Press.  

Wikipedia (2010a, October 31). History of Newark, New Jersey. Wikipedia. Retrieved from,NewJersey 

Wikipedia (2010b, October 31). Newark, New Jersey. Wikipedia. Retrieved from,NewJersey

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