Elizabeth Tandy Shermer: The Long War Between the States (for Business)

Elizabeth Tandy Shermer is a Paul Mellon Fellow of American History at the University of Cambridge. Her book, Creating the Sunbelt, will be published later this year. The opinions expressed are her own.

American firms have been on the move of late -- and not just to Mexico or China. Most major job relocations are from one U.S. state to another, according to the Department of Labor. And with unemployment remaining stubbornly high, and companies sitting on a lot of cash, states have been competing ever more fiercely to attract new businesses.

Ohio reportedly has offered incentives worth $400 million to Sears to entice the company and its 6,000 employees to move from Illinois. Pennsylvania, Ohio and West Virginia are vying intensely to be the home of a new "ethane cracker" Shell plans to build. The governors of Kansas and Missouri have intervened, personally, in a battle to host the headquarters of AMC Entertainment.

But such competition is hardly new. In 1976, Business Week warned of a brutal "Second War Between the States." Policymakers and local business groups across the country battled for new industries, not with bayonets or bullets, but with tax concessions, anti-union laws and generous giveaways.

This war had been steadily building in scope and scale for decades. Before the Great Depression, skirmishes took the form of efforts to "buy payroll" for struggling towns in the American South and West. Small business associations, which often took on the duties of boosting for their hometowns, wooed executives with promises of low taxation and little oversight of the factories built to prepare local harvests and mineral loads for shipment....