Before La La Land, there was Fort Lee, New Jersey

New Jersey, overlooking the Hudson River. You can see Manhattan on the other side.

Yeah. The center of the movie making world was filmed here. This is where the term cliffhanger was popularized on these very cliffs.

And you can kind of tell why. They're really stark, jagged, very tall cliffs. We're right at the edge here.

And Alexi, I brought this rope here.

I don't know if that looks, is that strong enough to support human body weight?

I was like, who thought we could reenact one of these silent films with you dangling off the cliff?

Well, I still do have a lot of questions that we need to answer in this show. There's only one way to make people stick around to find out.

This is the indicator from Planet Money. I'm Darian Woods.

And I'm Alexei Horowitz Ghazi. Today on the show, the the birth of Hollywood. How movie makers traded the steep cliffs of the Northeast for the temperate valleys of Los Angeles. And what this teaches us about economic hubs. Okay, Darian, can you, can you pull me up now?

Stay tuned to find out.

Darian?

We wanted to uncover how the film industry started in the New Jersey New York region and why it then moved all the way to Hollywood.

In the early days, the Northeast had two main special ingredients, Broadway and Thomas Edison. They gave the region a huge advantage.

Richard Kozarski is a historian focused on that period. And he starts the New Jersey story with one of those main Edison. In the late 1800s, Thomas Edison's team invents the first motion picture camera and viewer.

That is West Orange, N.J. a complex where Thomas Edison has brought together engineers and chemists to invent. But it's a bit far from our second ingredient. You know, the performers on Broadway. But then in 1907, Edison's company shoots rescued from an eagle's nest in Fort Lee. That's right across the Hudson river from New York.

The movie's about an eagle that abducts a baby and takes it to its nest on a cliffside. The hero is played by an actor by the name of D.W. griffith. And of course, he tries to save that baby by dangling from a rope over that cliff.

It wasn't a cliche.

A predecessor to Universal Studios constructs the first permanent building, soon followed by others.

So filmmaking is centered in Fort Lee, wedged in between Thomas Edison's innovation campus to the west and Broadway just over the river. The New Jersey New York area becomes this hotbed of movie making, forming what is known as an industrial agglomeration. William Strange is an urban economics professor at the University of Toronto. He explains agglomeration like can produce things

People were making movies in New York and New Jersey because people were making movies in New York and New Jersey. Williams says because of this scale effect and this kind of density of knowledge, the cards were initially stacked against LA as becoming a movie making hub.

There are growing frustrations among filmmakers like Thomas Edison's innovations are not free. Around 1908, Edison pools together as many patents relating to filmmaking as he can. If you want to buy rolls of film, you have to buy it from Edison, who tries to gatekeep which studios can make movies. And he forces filmmakers and cinemas to pay him licensing fees. Richard Kozarski says Edison actually sends out detectives to bust filmmakers using his equipment. Without paying those fees.

Another obstacle for filmmakers is how dependent the film cameras are on sunlight. Artificial lighting exists, yes, thanks again, Thomas Edison. But it is expensive.

The sense at the first big reason why the New York, New Jersey area didn't stay the moviemaking capital winter.

Some movie makers, like D.W. griffith, who's now become a director and soon becomes famous for his notoriously racist Birth of a Nation. People like him start to try out California for their winter shoots.

For him, land is cheaper and so are labor costs.

Without unions, the electricians and carpenters and tailors have less bargaining power to negotiate higher wages.

Another thing to worry about less in California. Thomas Edison in California. Edison still has his people to serve lawsuits. But being a more spread out place, it might have been more cumbersome for him to enforce monopoly against independent movie makers. Richard Gazorski ultimately thinks California's varied landscapes and cheaper cost of land and labor were the bigger drivers of the shift.

Though by 1921, 80% of the world's movie market is shot in LA and a few years later, the first feature with dialogue has key parts filmed on Sunset Boulevard. The Jazz Singer. Goodbye.

And even as Los Angeles labor and land costs rise through the years, and even as more indoor shooting becomes possible, Hollywood maintains its dominance. Urban economist William Strange uses an analogy to explain why. He says, in the 1800s, factories were powered by water wheels. And so cities grew up around fall lines, you know, where the rivers plunged forming waterfalls and you could harness more of that water power. Water wheels have not mattered for a century, and yet we still see really

Even after much of the original reasons for Hollywood being Hollywood were taken away, it still thrived.

That said, the transition from Fort Lee to Hollywood shows that economic clusters may not last forever. That's what people in LA are worried about today. We'll investigate that on tomorrow's episode. Check out our Instagram for a silent film Alexi and I made with the expert direction of our summer fellow Ella feldman. We are PlanetMoney. This episode was produced by Angel Carreras with engineering by Robert Rodriguez. It was fact checked by Cierra Juarez Cake and Cannon edits the show and the Indicator is a production of NPR.