Gotham_ A History of New York City to 1898 - Edwin G. Burrows [812]
WORK OR BREAD!
New York City’s economy fell apart with frightening speed. Wall Street brokerage houses took the first hits, but the damage swiftly spread to other financial institutions that had invested heavily in railroad stocks and bonds. Life insurance companies crumbled: of the thirty-two companies chartered since 1861, only eight remained in 1877. A score or more savings banks collapsed as well. Investment bankers too were gloomy: “Everything looks dark,” August Belmont wrote his son in October 1873. It was impossible for him to “imagine the utter prostration of all business.”
The real estate bubble burst. Inflated values collapsed; the equities of thousands of property owners were wiped away, one industry spokesman wrote, “as with a sponge.” An avalanche of foreclosure proceedings drove down land values, and lots near Fifth Avenue that fetched a hundred thousand dollars in 1873 went for forty thousand in 1876, if they found a buyer at all. Row after row of middle-class houses, thrown up so confidently, now went begging. Fully half the speculators who had built them were, said the Real Estate Record and Buyers’Guide in 1875, “swept out of sight [by the] momentous and unprecedented crisis.” Construction projects declined 70 percent between 1871 and 1877. The grand plans for uptown improvement went into hibernation. The boom on the metropolitan frontier deflated. Small investors who had bought Queens lots in the auction sales of 1870-73 couldn’t pay their taxes and were foreclosed. Promoters went bankrupt. The development of Queens came to a complete stop.
In Manhattan the blight spread from the financial district up lower Broadway, which by 1876 was plastered with FOR LET placards. Many former wholesale stores were now occupied by auction marts selling off bankrupts’ goods. Two years later, “vacant shops, stores and manufactories,” the mayor reported, “stare at us in every street.” Steinway agreed that “business seems to be perfectly dead,” with “not a single order coming in.”
As usual, most people’s loss was some people’s gain. Sharks cruised the roiled stock market waters, snapping up sinking securities. Jay Gould emerged the master of Western Union. The young George F. Baker bought out the majority shareholder of First National Bank. Drexel, Morgan made a substantial profit in 1873, and with Jay Cooke removed, the big treasury offerings would now go to them, to New York’s other Yankee house, Morton, Bliss, and to the two major German-Jewish firms run by Seligman and Belmont. In the land market too, as prices scraped bottom, well-heeled buyers moved in to scarf up bargains: Belmont was active; so was newcomer William Rockefeller.
As usual, working people bore the brunt of things. By the winter of 1873-74, 25 percent of the city’s labor force had lost their jobs, and the wages of the rest declined steadily. Hunger and homelessness spread. The shanty-dwelling population of the West Side burgeoned. Thousands sought shelter on the floors of police stations or almshouses. The New York Commissioners of Charity relief rolls soared. “Formerly,” one official said, “[we confined] relief to women. Now the men come to us hungry with hollow cheeks. . . . It is terrible, terrible.” Too terrible for some: in August 1875, Andreas Fuchs, a forty-year-old shoemaker, shot himself to death in Central Park, leaving a note for his wife and children that explained, “I have no work and do not know what to do.”
As in prior depressions, hard times stirred popular discontent. Workingmen disliked charity. The YMCA sold “dinner tickets” to New York businessmen to give to the unemployed, but the New York Workingmen’s Central Council rejected “crumbs that fall from the tables of the rich.” Nor did they like the police lodgings—“living charnel houses” that reeked “with filth