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Widespread municipal defaults in the late 19th century prompted U.S. states to pass laws restricting the amount of debt cities could incur. These restrictions generally did not bind until the 1920s, when suburban growth spurred local governments to invest in infrastructure, most of which was financed by bonds. We study the relationship between several major debt restrictions – debt limits, supermajority voting referenda, and debt exceptions – and municipal indebtedness in the Roaring Twenties. We find that cities that faced more restrictive debt rules were less indebted by 1929. We also find that debt limits reduced the amount of capital spending in cities during the 1920s and 1930s, while stricter voting rules reduced the likelihood of municipal default in the 1930s. These rules thus determined not only the degree of debt accumulation in early 20th century cities, but also their infrastructure investment and financial health.

Rising incomes and automobile ownership encouraged widespread suburbanization and urban growth during the 1920s. These developments were facilitated by debt-financed infrastructure spending on the part of local governments. When the Great Depression struck, it brought a crisis in which cities were forced to reschedule debt, were at risk of default, and were weakly positioned to respond to local economic crisis. This paper seeks to identify the factors that led to high city debt loads in 1929 and the implications for urban communities in the downturn. We find that cities constrained by strict government debt limits and a supermajority popular-vote requirement for borrowing were significantly less indebted in 1929, while cities facing strict tax limits were more indebted. Cities carrying high debt loads into the Depression made bigger spending cuts in critical areas between 1931 and 1933. These results shed light not only on the urban experience during the downturn, but also the effectiveness of institutional constraints on local government borrowing during the early twentieth century.

Natural disasters that destroy urban areas leave opportunities to adapt city environments to contemporary needs. Since it is costly for developers to adapt durable buildings to changing economic conditions, such investments can be a significant factor in determining urban growth and development patterns over time. Exploiting the 1906 San Francisco fire as a natural-experiment setting in which the city's building stock was exogenously reduced, this dissertation examines three urban outcomes before and after the disaster using the fire's boundary as a discontinuity in treatment. These outcomes are the land-use mix, residential density, and firm relocations. Evidence suggests that dramatic changes in San Francisco's land use and structure occurred upon redevelopment following the disaster. Specifically, the land-use mix changed significantly as land acreage made a relative shift away from residential use toward nonresidential use after the fire. Redevelopment of housing resulted in a 40 percent increase in residential density in areas razed by fire relative to unburned areas. Firm locations changed significantly as well, as burned-out firms were more likely to make post-disaster moves to different city blocks relative to firms on unburned blocks, so that the fire increased the likelihood of relocating by at least 30 percentage points. Together, these findings suggest that thriving cities experience substantial rigidities in the form of durable capital investments.