Cataclysmic Money

Definition

Cataclysmic money is Jane Jacobs's theory of finance as the city's fate-maker: "Three principal kinds of money finance and shape most of the changes that occur in residential and business properties in cities" — conventional mortgage credit, government money, and the shadow world of high-interest exploitation — and all three "behave not like irrigation systems, bringing life-giving streams to feed steady, continual growth. Instead, they behave like manifestations of malevolent climates… affording either searing droughts or torrential, eroding floods" (Jacobs 1961, p. 293). Cataclysmic money "pours into an area in concentrated form, producing drastic changes"; gradual money — "the kind of money necessary for capitalizing upon, building upon and supplementing what exists" — is lacking (pp. 292–293). The instruments of drought are the credit blacklist and the slum-clearance map, "identical, both in conception and in most results" (p. 300): "Credit-blacklisting maps, like slum-clearance maps, are accurate prophecies because they are self-fulfilling prophecies" (p. 301). The exceptions prove the rule: the North End financed its unslumming "by reverting to primitive methods of barter and hoard that worked before there were banking systems" (p. 296); the Back-of-the-Yards broke its blacklist by threatening mass deposit withdrawals through the Alinsky Council (pp. 297–300).

The concept extends to the suburban side: "Endless suburban sprawl was made practical (and for many families was made actually mandatory) through the creation of something the United States lacked until the mid-1930's: a national mortgage market specifically calculated to encourage suburban home building" (p. 308) — "City people finance the building of suburbs" (p. 309). And to the subsidy side: eminent domain operates as an "involuntary subsidy," ruinous to site businesses, without which "redevelopment for private profit is ideologically and fiscally justified" on false returns (pp. 311–313). The programmatic upshot: "The forms in which money is used for city building — or withheld from use — are powerful instruments of city decline today. The forms in which money is used must be converted to instruments of regeneration — from instruments buying violent cataclysms to instruments buying continual, gradual, complex and gentler change" (p. 319).

Key Thinkers

• Jane Jacobs — the concept's author: "it is not the mere availability of money, but how it is available, and for what, that is all important" (1961, p. 291).
• Charles M. Haar (not yet paged — see log) — the Harvard law scholar whose credit-authority dictum frames the chapter: "the credit authority is not only the power to destroy but the power to create and the power to divert" (p. 294).
• Anthony J. Panuch (not yet paged — see log) — the management expert whose 1960 report supplies the involuntary-subsidy economics (p. 311ff).

Related Concepts

• unslumming — the process starved: "Impracticality is the rock on which many an unslumming slum is wrecked" (p. 288).
• aged-buildings — the stock that gradual change sustains; one-age construction as the fiscal signature of cataclysm (p. 198).
• self-destruction-of-diversity — the other destination of the flood: "Much [conventional money] is not going into cities at all… more is going into the self-destruction of diversity" (p. 308).
• urban-sprawl — the financed product: the FHA-guaranteed national mortgage market as sprawl's making-practical (p. 308).
• organized-complexity — the epistemic frame: cataclysmic money as average-thinking applied to a process-problem.

Source Support

Sources in the wiki that discuss this concept:

• The Death and Life of Great American Cities (Jacobs 1961) — the concept's chapter (Ch. 16, pp. 291–320): the three kinds of money (pp. 292–293); the irrigation/figurative contrast (p. 293); Haar's dictum (p. 294); the North End miracle (pp. 295–297); the Back-of-the-Yards counter-attack (pp. 297–300); the blacklist/slum-map identity and self-fulfilling prophecy (pp. 300–301); the shadow-world sequence in West Manhattan (pp. 302–304); the East Harlem $300,000,000 "foreign aid" audit (pp. 306–307); the national mortgage market and Hoover/Tugwell quotations (pp. 308–310); eminent domain as involuntary subsidy, with the Panuch druggist case (pp. 311–313); slum landlords' condemnation profits (pp. 314–316); the closing conversion dictum (p. 319).
• Dark Age Ahead (Jacobs 2004) — the concept's bubble chapter, forty-three years on: the money-growing-on-houses regime — home-ownership rates rising to record levels while prices rose "about 7 percent a year," owners "continually borrow[ing] more against the rising value of these assets," Canadian household debt-to-income ratios "at record high levels" (p. 31), American mortgage-interest deductibility and record resales at record prices with record-low rates (pp. 31–32); the burst forecast — "sooner or later the bubble must burst, as inevitably all speculative bubbles do when their surfaces are not supported by commensurate increases in economic production" (p. 148) — with the deliberate-maintenance caveat (Gramley/Greenspan's 2.5 percent scenario, pp. 147–148) and the convergence signal (vacancy rates rising in condominiums; London prices falling, p. 148); and the bubble as densification's hidden trigger — its bursting converting passive house wealth into a pressure to earn, i.e. to densify (pp. 147–149, see densification). The 1961 cataclysm/gradual pair thus acquires a 2004 speculative-money fourth register: cataclysm deferred by policy, then due all at once. See vicious-spirals, housing, urban-sprawl.

Source Support linking rule: All entries in this section must be wikilinks to source note pages in wiki/source-notes/ using the source-notes/ path prefix. Never link to raw files — raw files are not wiki pages.

This page requires fuller treatment — created at the Jacobs ingest; awaits the financialization literature the wiki already holds (Harvey, Bismarck, Soules) as the direct descendants of this analysis.

Open Questions

• Jacobs anticipates redlining scholarship by decades, and treats the banks as believers in planning theory ("they have gotten their theories from the same intellectual sources as the planners," p. 11) rather than as autonomous villains: "They are not villainous" (p. 300). Does the later financialization literature (Harvey, Bismarck) replace the ideological explanation with a structural one — and does the substitution change the remedies?
• Her remedy is an Office of Dwelling Subsidies buying gradual change through guaranteed rents (Ch. 17). The wiki's finance cluster describes the opposite: architecture as "the fundamental apparatus for the making of the indebted man." Is Jacobs's gradual money recoverable inside financialized real estate, or is it an artifact of the regulated mortgage era she was criticizing?