Excerpted from the book Subway: The Curiosities, Secrets, and Unofficial History of the New York City Transit System by John Morris, published on October 6, 2020 by Black Dog & Leventhal, an imprint of Running Press, a division of Hachette Book Group. Copyright 2020 John Morris.
The subways were intended to reshape the city—to break up the slums and make it easier to commute from outer neighborhoods to the industrial and business centers of Manhattan and Brooklyn. And they did. But market forces produced a cityscape quite unlike what reformers hoped for, and real estate speculators were sometimes caught by surprise when lines they had counted on didn’t materialize. It was all part of the symbiotic relationship between transit and real estate in New York.
Manhattan’s population peaked in 1910 at more than 2.3 million, nearly half again as many people as there are today. Nearly 600,000 immigrants, mostly Eastern and Southern European, were packed into the Lower East Side, the most densely populated area on earth at the time. Across the island and uptown, San Juan Hill, west of Columbus Circle, had emerged as a dense, largely black and Puerto Rican slum.
Successively tighter building codes improved the ventilation and sanitary facilities in the tenement apartments where the poor lived, but the laws did nothing to reduce density. As the population rose, landlords simply built six-floor walk-up apartment houses to the new standards instead of four-floor ones. As one advocate for the poor wrote:
Conditions are uncivilized in those sections. Cheap rapid transit is the solution to the problem of the slums. The City will become a civilized city just in proportion as it shall provide adequate transit.
Into the 1910s, much of Queens, southeast Brooklyn, and eastern areas of the Bronx remained rural, as this 1909 bird’s-eye view shows. The Inwood section at the northern tip of Manhattan was also unexploited. The urbanized strands in central and eastern Queens lay along the Long Island Railroad’s lines.
Reformers imagined workers commuting from their own houses with gardens, where the air was clean. The wealthy, meanwhile, felt that overcrowding had to be addressed in order to integrate the immigrants into American society—and to head off socialism and class warfare.
The elevated lines of the late 1800s were supposed to help, but they were simply too slow. As the population mushroomed and spread north in Manhattan, the newly developed areas also became densely settled. Development simply outran the transportation system. The new areas reached by transit were never enough to satisfy demand, so land prices rose sharply. In the Bronx, as transit improved from 1904 to 1916, the price of lots in developed neighborhoods rose tenfold.
For the real estate industry, this was a golden opportunity. When it comes to development, “subways are to New York what water is to the West.”
Transit-driven development did not occur overnight. A decade after the Ninth Avenue el was built along what we now call Columbus Avenue in 1879, Columbus and Amsterdam Avenues were lined with apartment buildings and shops, but there were still many empty lots on the side streets and a backlog of unsold brownstone town houses. Henry Morgenthau, a real estate speculator, was convinced the market would pick up, and he snapped up 24 adjacent lots on West 74th and West 75th Streets at auction in 1888. Inspecting the land after his purchase, he was shouted at by two bird hunters. “Don’t you see our traps?” one said to Morgenthau.
The bird hunters’ days were numbered. Morgenthau soon sold the lots at a healthy profit, and developers filled those blocks with town houses, most of which remain to this day.
When planning for a subway progressed in the early 1890s, a line up Broadway to the northern parts of Manhattan was settled early on. Based on that, Morgenthau placed a huge bet on Washington Heights. In 1891, he paid $300,000 for 16 square blocks along 181st Street. At the time, it was the hinterlands, but he expected it would become a business corridor because it was linked by a bridge and trolley line to the Bronx. A few months later, he sold it all in parcels at auction, raking in $780,000, a 160 percent profit on the money he and his investors had put up.
Morgenthau was smart to sell when he did. John Reilly, a former city registrar who bought up all the lots on one side of St. Nicholas Avenue at 181st Street in the auction, gleefully reported to Morgenthau afterward that he had obtained inside information that the tracks would run under St. Nicholas and that a station would be built at 181st. He was right, but with all the squabbling over routes and financing, it was another 15 years before the station opened.
As the IRT neared completion in 1904, Morgenthau shifted his sights northward. He was “astonished to find that there had been no activity in anticipation” of the subway in some areas, so he bought 2,500 lots in the Bronx, the Dyckman-Inwood areas in Manhattan, and Washington Heights.
An even bigger land speculator was Charles T. Barney, who headed the Knickerbocker Trust Company, one of the city’s biggest banks, and was an early investor in the IRT. Like Morgenthau, he saw opportunity in the subway. Before it was built, Broadway on the Upper West Side was littered with empty lots, and coal and lumber yards. Barney raised $7 million from investors, the equivalent of about $180 million today, to buy land ahead of the subway. He acquired the four then-vacant corners around the 86th Street station, as well as chunks of Washington Heights, Inwood, and the Kingsbridge section in the southwest Bronx.
In February 1904, as opening day neared, Barney offloaded 150 lots between 135th and 137th Streets. The week the subway opened, his group sold another $1.25 million of lots in Washington Heights acquired in 1902. The Belnord, the world’s largest apartment building when it opened in 1908, occupies an entire city block on the northeast corner of West 86th Street and Broadway once owned by Barney.
Like many New Yorkers, Barney was in favor of the subway so long as it wasn’t built right outside his front door. As it happened, Barney lived in a town house on Fourth Avenue (now Park Avenue) along the path of the first line, and he sued the IRT, seeking a court order to stop the work, arguing that the digging came too close to the foundation of his home. A judge denied his request, but Barney was right. The front of his house was undermined when the ground subsided along the tunnel in 1903. By then he had resigned from the IRT board.
(Barney came to a strange end three years later. In November 1907, a few weeks after a run on the Knickerbocker Bank led to Barney’s ouster there, he shot himself in the abdomen at his home. He was still standing when his wife came running to his room. She called the doctor. Barney, fully alert, summoned his lawyers to draft a new will and gave instructions on business matters from bed. He died a few hours later as his doctors were patching him up, still at home. His wife said he had been depressed, and it was ruled a suicide.)
In economic terms, Morgenthau and Barney were capturing the value that the subway created. Those economics dramatically shaped the city that grew up around the new rail lines. As land prices shot up, builders couldn’t afford to construct houses. Even apartment buildings with generous gardens were hard to justify. So, instead of the green, suburban areas reformers imagined, by 1910 Washington Heights, Inwood, and the Bronx areas near the line were covered with tenement apartments. Better tenements than on the Lower East Side, to be sure, but not the idyllic, leafy homes many had hoped for.
Real estate investors also shaped development in Brooklyn and Queens when the Dual Contracts and IND lines opened up the outer parts of those boroughs beginning in the mid-1910s, but development took different forms there.
Rather than a rush of small transactions and construction shortly before and after the lines opened, big developers such as the Queensboro Corporation and Wood, Harmon & Company bought great blocks of land, then built and marketed the homes themselves. Wood, Harmon shelled out $4 million for undeveloped property in Brooklyn through 1909 as plans were being laid for new lines, and it claimed to control 20 percent of Brooklyn’s available land, much of which was still rural at the time. The companies aggressively advertised their offerings, stressing their public transit connections.
Under the Dual Contracts, the IRT and BMT were forced to invest in lines in some areas where there would be no riders at first in order to win lucrative routes through the core areas of Brooklyn and Manhattan. Photos of the new lines vividly show the Transit Commission’s “build it and they will come” approach. The vast expanses tapped by those lines kept land prices low enough that developers could make a profit putting up single- and two-family homes in these neighborhoods. And where there was more concentrated apartment construction, it was a bit closer to the bucolic vision of the social reformers. The Queensboro Corporation’s 350-acre Jackson Heights development was a model. After the Flushing line reached the area in 1917, the company began building cooperative apartment blocks that formed walls around large, private gardens for residents. In ads, the company played up the 22-minute commute to Grand Central.
Things didn’t always play out according to plan for the developers, however. Wood, Harmon invested heavily along Utica Avenue in Brooklyn in hopes of a line that never came (see chapter 11). Similarly, in Bayside, at the far northeast corner of Queens, the North Shore Realty Company built homes when the IRT’s Flushing line (7) was expected to reach there. Instead, the line never went east of Downtown Flushing, well short of the homes.
Even worse was the situation in Staten Island, where Wood, Harmon bought land and began touting its lots in 1912 based on the prospect of a subway line to Manhattan via Brooklyn. The route was first mooted the year before, and resurfaced repeatedly through the 1920s, but it was never built (see chapter 11).
By the time the main IND lines were completed in the Bronx, Queens, and Brooklyn in 1940, the subway had succeeded in mitigating the worst of the overcrowding in Manhattan. The city’s total population rose 56 percent from 1910 to 1940, but Manhattan’s fell 19 percent, and the most crowded neighborhoods, such as the Lower East Side and East Harlem, saw bigger drops. The population of Williamsburg, Brooklyn, jammed in 1910 with poor Jews and other immigrants who spilled across the East River from the Lower East Side, fell by a quarter.
Meanwhile, the areas around the new subway lines miles from the center of the city saw four-, five-, and six-fold population increases, and many of those areas had single- and two-family homes—as reformers had hoped.