Arkham was a thriving college town, boasting not only Miskatonic University but Arkham Sanitorium, the real-life inspiration for Gotham City's Arkham Asylum. One of the premier mental-health facilities in the United States, the synergy between it, Miskatonic Hospital and the University verged on catapulting Miskatonic University into the exclusive echelons of the Ivy League schools - perhaps not quite the prestige of Harvard or Yale, but right up there with Dartmouth or Cornell. Even more excitingly, Lovecraft's works bloomed into a cult phenomenon after his death in 1937, and a provision made in his estate provided funding for the study of parapsychology and other 'supernatural' phenomena - making the Center for Paranormal Research at Miskatonic University the third such organization in the entire United States. The Jeremiah Orne Library was home to more than 200,000 books, not including a large collection of uncatalogued manuscripts, journals, and letters: all first-person reports of supposedly 'supernatural' experiences. Almost all of it superstition, of course, but fascinating for historical and sociological studies even if it had no real-world application.
Then, in 1967, the Great Flood overflowed the banks of the Miskatonic River. Days and nights of ceaseless, driving rain ground the area to a halt, and the property damage wrought by the storm was immense. Worse affected was the low-lying University campus. Several of the most expensive machines in the Science and Medical schools were ruined by water damage, and the library basement was entirely flooded, destroying most of the priceless, irreplacable collection of original documents. The University was forced to shut down for several weeks, and while they limped out the remainder of the academic year it became clear that repairs were not financially viable. Miskatonic University closed its doors, leaving most of the basements flooded with stagnant water, and the bulk of the damaged property to rust and moulder in damp labs and lecture halls.
A college town without a college is inevitably doomed. Arkham slowly became a sad remnant of its glory days, maintaining its basic infrastructure but able to do little more.
Innsmouth was founded in 1643, and held some of the most prominent ship-yards before the American Revolution. Throughout the early nineteenth century it remained a highly prosperous town, until 1846 when disaster struck. Outbreaks of yellow fever had been occuring throughout New England for almost fifty years before Innsmouth was struck hard, losing almost 13% of its total population. Most of the dead were children, their immune systems too undeveloped to fight off the virus. It broke the spirit of the town, which did not recover before the twin blows of the Panic of 1857 (the first world-wide economic crisis) and the introduction of the steamship, which put almost all the Innsmouth shipping yards out of business.
The gold deposits north of town prevented Innsmouth from complete economic collapse, at least temporarily. Placer rather than hard rock deposits, they were basically extracting gold from dirt, a process which requires cyanide and had correspondingly poor effects on the health of the miners. Other small industries such as fish-packing and glue-making allowed the citizens to eke out a living, but anyone with the money to do so moved away from the broken town - even if they could only afford to move so far as Arkham, the next town over. There was not so much a rivalry between the two towns as a feeling among Innsmouthers that Arkhamites wouldn't stop to piss on their neighbor if he were on fire, and a feeling among Arkhamites that all the dross and debris floats downriver eventually. Those few families that managed to scramble their way out of Innsmouth were usually the loudest and most public detractors of their former town, eager to identify themselves with the cultured, educated Arkhamites rather than the sullen, unhealthy yokels who always smelled of fish.
As is the case for many small, suffering communities, the people of Innsmouth bonded over shared religion. The various denominations of Christianity had become increasingly unpopular for various reasons, and for the majority of Innsmouthers the Hermetic Order of the Golden Dawn took the place that church had previously held in their lives. No injury done by Lovecraft was as deeply resented as his rewriting of the Osiris-Dagon temple as 'The Esoteric Order of Dagon', and his portrayal of the philosophy and spiritualism practiced by its members as demon-worship and human sacrifice. The increased tourism enjoyed by Arkham and Kingsport as a result of his posthumous popularity only deepens the schism between the towns, because Lovecraft's growing popularity was a bane on Innsmouth. The depiction of its wretched citizens as half-human demon-worshipers impacting badly on its economic exports, particularly the fisheries which were the town's primary trade. Innsmouth's poverty grew to the point where much of the town was without gas, electricity, or even clean water, and the dream of appropriate medical services or educational options seemed as far away as the moon, despite the presence of facilities just upriver in Arkham - facilities inevitably closed to them. Increasingly sullen and helpless, the town became more and more insular, turning away from the judgment of the outside world as they struggled with their increasingly hand-to-mouth existence. To this day there are intelligent, educated individuals who firmly believe that Innsmouth is a fictional town, a product of Lovecraft's fertile imagination.
In 2006, the land north of Innsmouth was bought up by a young entrepreneur by the name of Edwin Ramsay. He revisited the long-played-out mining areas with the comparatively new Carlin-style mining techniques, a significantly more efficient way to extract sedimentary gold from dirt and rock. His explorations on how to exploit the ecological resources of the Great Innsmouth Salt Marsh gave rise to the discovery of bog iron in vast quantities, leading to Innsmouth's first economic boom since the nineteenth century. Within thirteen months the proposal to incorporate the towns in the Miskatonic Valley into a single city 'to better support the growing industry' had been pushed through despite the protests of Innsmouth's citizens, who argued that they had never received help from Arkham or Kingsport during their long decades of need, and would prefer to maintain their independence now that better times were on the horizon. As many people feared, the income brought in by Innsmouth mining has mostly been spent in Arkham and Kingsport, with the new suburb of Derby slated to become the corporate district of the twenty-first century. Innsmouth has received enough to rescue it from a third-world standard of living, but little more. Supporters of incorporation argue that 'Arkham' and 'Kingsport' do not exist any longer, and that all Kingsmouth's profits are being re-invested in the improvement of Kingsmouth.
Kingsport is just a shade older than Innsmouth, founded in 1639. Like its northern neighbor its early fortunes were founded on shipbuilding and a merchant navy, and in the late nineteenth century the town turned to fishing as the main industry. Kingsport is considerably more scenic than Innsmouth, however, and while it was never a grand city it never had the terrible reversal of fortunes that both Arkham and Innsmouth suffered. It grew into a comfortable niche as a tourist town, largely white, middle-class, Ango-Saxon and Protestant. Many of the wealthier set live in Kingsport only half the year, summering by the seaside and heading south for the winter months.
It didn't escape all the excitements of American politics. The hysteria of the Salem witch trials spilled over to Kingsport, and four alleged witches were hanged in 1692, giving name to the 'Witch Wood', now a walking track favored by young lovers. During the American Revolutionary War, Kingsport was briefly blockaded by the British in response to privateering - basically state-licensed piracy. A cannonball buried in the wall of the Old Customs House remains as a memorial to that brief, exciting time.
The City Council keeps fairly strict rules about what may be built in Kingsport. Restoration of old buildings is always preferable to the construction of new buildings, and those that are new-built must match the styles of the old. Ever-conscious of the importance of tourist appeal, Kingsport actively tries to maintain 'olde worlde charm', only inviting the very best of the new. It frequently seems to be caught several decades behind the times, like time itself moves more slowly here. While it probably goes too far to say that Kingsport has led a charmed history, it has certainly enjoyed a much more placid journey to the present day than its neighbors, and few of Kingsport's residents doubt that whatever prestige the nascent city of Kingsmouth might have is due to their involvement.