Joint Legislative Committee on Housing

The New York State Legislature established the Joint Legislative Committee on Housing to investigate all possible causes of the post-World War I housing shortage. Appointed in May 1919, the Committee (known as the Lockwood Committee) was chaired by Senator Charles C. Lockwood, a three-term Republican from Brooklyn. The committee was assigned to examine the causes for lack of construction of new housing; the increases in rents; possible combinations in building supply and labor; shortcomings of housing financiers; and any other issues related to providing housing. Before its tenure expired, the committee exposed corruption or misconduct at every level of the housing industry. Initially landlords who charged their tenants usurious rents were the committee's focus, but by the time the committee ended its investigation, labor unions and building material suppliers were implicated in a web of conspiracy which successfully inflated the price of housing. Furthermore, banking and insurance practices in the real estate market were examined and found wanting. Less than a year after the Armistice brought peace to Europe, havoc ruled in the United States' housing market; New York State alone faced a shortage of 100,000 homes. Hit especially hard were those who rented housing. Propelled by profiteering, rents rocketed upward, and because of the nearly endless demand for housing, landlords routinely evicted tenants in favor of those who could pay the increasingly higher rents charged. Rents were driven up further by property speculation--the result of the building stoppage caused by the war. In addition, housing was crowded; in New York City, the ratio of occupants per square foot was three to four times that of the pre-War level and deemed a "menace to lives, health, morals and safety of the entire community." In April 1920, the committee issued recommendations to blunt the rent spiral, resulting in the passage of twelve laws (Chapters 942 through 953 of the Laws of 1920), passed under the rubric of the Anti-Rent Profiteering Bill. The committee also made recommendations (which became law) designed to stimulate housing construction. The new laws granted tax abatement powers to local authorities who could use them to encourage new construction and also permitted municipalities to invest in State Land Bank bonds, which, it was hoped, would divert investment capital into needed new housing construction. Property owners opposed the Anti-Rent Profiteering Bill because it reduced landlords' absolute control over their property and injected the courts into the heretofore private landlord/tenant relationship. The new laws required that tenants receive 30 days notice before they could be evicted, and only under certain stringent conditions could a landlord evict a tenant. Tenants could be evicted if the landlord or his family wished to reoccupy rented quarters, if a building were to be converted into a co-operative and the tenant did not wish to purchase his quarters, or if the building was to be demolished and plans to rebuild were on file with the appropriate city offices. The new measures also expressly prohibited landlords from shutting off water, heat, and power to their tenants and made several other technical changes in the law which previously property owners had exploited at tenants' cost. Also, eviction was permitted if tenants were "objectionable"--with a court of law determining what characteristics were encompassed by that term. However, the landlord carried the burden of proof when the court weighed objectionability, and a review by the court was mandatory before eviction could occur. Finally, landlords objected to the misunderstood "Twenty-Five Percent Rule." Under this law, tenants could not be evicted if they failed to pay all their rent if the rent increased by more than twenty-five percent in one year or if in the month immediately following a rent increase, they only paid the old amount. Also, if rent had already been increased in the past 12 months, the landlord was required to prove in court that any additional increases were justifiable. The committee's bills were opposed by numerous organizations including the New York State Real Estate Board. Others, including officials in New York City Mayor John F. Hylan's administration, complained that the Lockwood bills were harmful not only because of the abridgement of absolute property rights, but also because they would prevent builders and investors from receiving a full return on their investments, thereby aggravating the housing shortage. However, despite several court challenges, the new laws stood. Investigating the housing shortage led the committee to examine closely the construction trade where it discovered numerous combinations or conspiracies among the labor and supply components of the housing industry to extort and price-fix. Such was the magnitude of the committee's initial findings concerning the building trades trust that U.S. Attorney General A. Mitchell Palmer agreed to assist in the investigation by sharing information already gathered by the Justice Department. The investigation revealed "profiteering, restriction of competition, price-fixing, trade strangulation and similar abuses in almost every phase of the building and allied industries," according to the Committee's interim report. The Building Trades Council of Greater New York and its president, Robert P. Brindell, were the epitome of the abusive practices uncovered by the committee. Because of the committee's investigation, the Council's price-fixing and extortive practices were discovered and Brindell prosecuted and convicted. The committee became embroiled in a power struggle with the legislature when the session opened in February 1921. Lockwood made front page headlines when he declared that a {dollar}1 million slush fund existed in New York City Hall in connection with construction contracts. He requested that his committee be given the right to grant immunity in order to thoroughly investigate the fund and that the committee's scope be expanded to examine the banking and insurance industries' connection with the housing industry. Immunity powers were not granted, but after a struggle in the legislature, the committee did receive authority to investigate the banking and insurance industry, and the {dollar}1 million slush fund disappeared from the headlines and the committee's agenda. The fight over expanded powers also led to the first serious criticisms of the committee. Some criticized the fact that little had been done to stimulate construction, while others, notably those who were investigated by the committee, accused its members of exploiting the issue for personal gain. These attacks represented the beginning of a growing opposition to the Lockwood Committee's work. When the committee investigated errant landlords, opposition was minimal, but when they started examining monied interests, the list of their detractors grew considerably. In the face of the growing opposition to their work, the Lockwood Committee issued an interim report, which was the lengthiest document produced by the committee. In it they addressed the issues of labor and supplier misconduct and made recommendations to end arbitrary practices which increased the cost of housing. They recommended that the constitution, rules, and bylaws of unions and trade associations which promoted price-increasing practices be changed to eliminate the inflationary procedures. Despite criticisms, the committee did significantly affect a number of people in labor unions and material supply businesses. The work of the committee led to the indictment of 416 individuals and 250 corporations involved in price-fixing schemes, and while most were convicted, sentences were usually small fines or jail terms of less than 90 days. Because of this, the committee recommended that the definition of illegal combinations be expanded to include any price-fixing act, the violation of which would require prison terms of three months to one year. Though this measure never came to pass, the committee did expose both horizontal and vertical combinations in almost every area of the building industry in Greater New York City including manufacturers and dealers of: cement; bricks; sand, gravel, and stone; steel and iron pipe; plumbing and steam heating apparatus; plaster; electrical fixtures; and roofing. Labor price fixing combinations were discovered in the Plumbers' Association; Steam Fitters' Association; Heating and Ventilation Association; Greater New York City Stone Contractors' Association; Bronze and Iron Association; and Architectural Iron Workers' Association, among others. In the case of government contracts, suppliers of labor or materials or both would collude to set higher prices and distribute contracts. In 1919, the committee estimated that this practice cost New York City alone an additional {dollar}5 million in construction costs. In addition, special committee hearings and investigations held in Buffalo resulted in the collapse of a similarly tight network of price-fixing manufacturers, suppliers, and labor unions there. The committee also uncovered many union practices which increased the cost of labor. Often menial tasks were classified as skilled jobs (requiring the cost of a higher-paid worker), and the use of labor-saving devices prohibited. Unions also limited membership and apprenticeships but would provide, for a fee, temporary "privilege cards" to individuals working at union sites. Keeping individuals out of the union provided a monopoly on labor in slow times and a cash bonanaza from the privilege card fees in active times. This money was often unaccounted for and used capriciously by labor officials. After the committee's report was issued, the legislature passed laws prohibiting unions from arbitrarily restricting apprenticeships or membership, limiting "priviledge card" fees, requiring accurate bookkeeping of the "privilege card" fees, eliminating union rules which unnecessarily impeded work rates, and prohibiting convicted union officials from holding office. In addition to labor abuses, lack of capital investment in the housing market also forced housing costs up. The committee probe found that the insurance industry--long an investor in housing--had, during World War I, withdrawn funds from the housing market to invest in war bonds, and afterwards, instead of re-investing in housing, put their funds into railroad and industrial bonds. In fact, in order to have more capital to invest in higher profit ventures, many insurance companies called in their real estate loans, further dampening the real estate mortgage market. In its interim report, the committee recommended that insurance companies be required to invest thirty percent of their total assets into mortgage loans, though this did not come to pass. The committee was criticized for its zealous investigation; many thought it went beyond the scope of their legislated mandate. The committee justified its sweeping actions in its interim report, stating, "Unless the home is assured to the average citizen at a reasonable price, the result will not only affect that individual and family, but the general public." In what was seen as an attempt to end the committee's investigations, Speaker H. Edmund Machold, acting under statewide pressure from powerful financial interests opposed to the Lockwood Committee, announced in February 1922 that all legislative committees would be scrapped because, in general, they spent too much money. Several people rushed to the Lockwood Committee's defense, including the State Architect who said the committee's investigation saved the State $450,000. Others pointed out that as a result of the committee's investigations, over {dollar}500,000 in fines were paid to the State, while the committee's expenditures totalled far less. Responding to rumors that the committee had been profligate, Lockwood issued a financial report detailing the expenses and activities of the committee: 15,000-plus pages of testimony taken at over 100 public hearings involving 642 witnesses leading to over 500 convictions over the course of three years cost taxpayers {dollar}225,000. While Speaker Machold's plan did not come to fruition, it was apparent that the committee's life was limited. Extended for one year, the committee began to wrap up its investigations. In the committee's last year, chief counsel Samuel Untermeyer continued investigating insurance companies, much to their consternation, but with little effect. The only laws that emerged from the committee recommendations were technical adjustments to fire, casualty, and mutual insurance investment rates and regulations (Chapters 660, 658, and 659 of the Laws of 1922). The most controversial of these measures permitted insurance companies to construct tax-exempt housing, which a judge later ruled void on grounds of fairness. By July 1922, Lockwood cited ill-health and announced he was not seeking reelection. Eight months later, he was considered for a federal judgeship in Brooklyn, but the business and labor groups whom he investigated successfully opposed his nomination. Years later, when his committee was a distant memory, he would hold a seat on the State Supreme Court. The Lockwood Committee concluded its hearings lobbying for a State Trade Commission which would have the function and authority that the committee had during its tenure. In 1926, three years after the committee's demise, the Legislature established the commission.