From the early days of the Allen brothers to the 1980s, Houston’s private and public elites have aggressively pursued economic expansion. The importance of such vigorous elite support for growth is suggested by comparing the very different 20th century developmental patterns of Houston and New Orleans.

In 1900, New Orleans was the South’s largest city, its preeminent mercantile center, and the region’s leading manufacturing city. New Orleans had an excellent natural deepwater harbor, the nation’s best inland waterway connections and abundant supplies of fresh and salt water. Large oil and gas deposits were discovered near the city before 1930. Yet despite these advantages—which at least equaled Houston’s-New Orleans never developed into a significant manufacturing city. Nor has it taken advantage of the OPEC oil price increases to become a city of postindustrial expansion for corporate oil operations.

The resulting contrast in population patterns between 1900 and 1980 is striking. At the turn of the century New Orleans had about five times the population of Houston, whereas in 1980 there were almost three times as many people in the Houston area as in metropolitan New Orleans. Much of the very great difference in growth can only be accounted for by the contrasting elite orientations in the two areas.

As a mercantile city that developed early in the 19th century, New Orleans had a well-defined and rigid economic elite rooted in trade and commerce. Their orientation has been very much toward maintaining the status quo, and they have shown indifference if not hostility to new economic ventures. Industrialization and manufacturing were not encouraged, nor were new corporate elites sought from outside. This prevailing view among the private elites in New Orleans unquestionably contributed to the city’s economic stagnation and the virtual cessation of local growth after World War II.

By contrast, in Houston private economic leaders have shown an unflagging commitment to growth and development and have supported public policies and leaders that favored growth.  Over the years a consistent pattern is evident, from Houston's pressure on the Wilson administration to complete the Ship Channel, to urging that World War II industries be sited along the waterway, to working with outside business leaders to encourage their relocation to Houston.  The primary commitment has been to growth. Managing problems associated with growth has been distinctly secondary.

While local government did not provide the primary impetus for Houston’s growth, it has played a critical role in creating and maintaining an environment that is conducive to development. The economic problems of the 1980s tested the area’s leaders to a degree not seen since the 1930s. The sharp decline in energy prices had profound effects on Houston’s mercantile, industrial, and corporate sectors. While oil prices rebounded from $10-$12 per barrel in 1987, the $38 level reached in 1981 is not likely to recur.  Little in the way of additional local funding from NASA can be expected, nor is more federal money for medical research and education on the way. The old engines of growth are stalling; but can new ones be found?

haracteristically, Houston's private and public leaders have pulled together to find the "switching mechanisms" necessary for a new round of urban expansion. Some of the leadership’s efforts have focused on infrastructure problems. Local elected officials and business leaders have been working to get several billions of dollars in additional public funds committed to dealing with Houston's traffic/mobility problems. Substantial new public investments in flood control are also being made. But most attention has been focused on developing a program of new economic initiatives for the area.  The Houston Economic Development Council (HEDC) was founded by the Houston Chamber of Commerce in 1984, with substantial private and public support.

By the end of the 1980s, these efforts to reshape Houston’s economic base were bearing fruit. For example, of the employment gains made from 1987 to 1989, 62 percent were attributable to non-energy growth.  In 1982, energy-related industries accounted for 83 percent of the city’s economic base. By 1989, that percentage had dropped to 61 percent and seemed likely to decline further as Houston’s economy steadily diversified. Entering the 1990s, few local analysts believe Houston will regain the explosive growth rates of earlier decades. However, the area seems to have weathered its most severe economic down-turn since the Civil War and began a process of "switching" to another phase of economic development that will sustain at least modest job and population growth.