Reading # 1         Co-op History/Discussion Club        July 12, 2009

The Birth of the Amalgamated Housing Corporation
                                                                                        
by Abraham Kazan, 1957

   After a titanic struggle which had lasted four years, World War I came 
to an end in 1918. The effects of this struggle in the field of housing 
only began to be acute in subsequent years. The cessation of construction 
during the war years was not immediately felt due to the fact that large 
numbers of the population were engaged in combat and fewer marriages were 
taking place. On the return of the men from the armed forces, the demand 
for housing grew; the shortage was soon evident and the cost of rent began 
to increase.
    In the City of New York, the strong demand for housing resulted in a 
wave of real-estate speculation. City inhabitants living in multiple 
buildings found at the end of almost every month that ownership had 
changed hands. With new ownership came an increase in the rentals, based 
on the new price placed on the property. Tenant-protest groups were 
organized; a wave of rent strikes resulted. The courts were busy hearing 
claims of non payments of rent. The housing situation for a large segment 
of the population became desperate. No constructive proposals were being 
made to alleviate the problem.
    The New York State Legislature and Governor Alfred E. Smith took 
notice of the drastic shortage of shelter. To stimulate the construction 
of additional housing the Legislature reduced the taxes on new housing to 
the extent of $1000 per room for a period of ten years. In 1926, the 
governor was responsible for the introduction of a new housing act, 
providing a state-controlled bank to finance low-rental housing. This 
bill, greatly watered down, was finally passed. It set up a State Board of 
Housing consisting of five members appointed by the governor; it permitted 
municipalities of 1,000,000 population or more to grant partial tax 
abatement on the new housing improvements for twenty years, in return for 
which the sponsors would agree to limit the rental to $12.50 in Manhattan, 
$11 in the Bronx, Brooklyn, and Queens, and $9 in Richmond. The sponsor 
also had to limit his return to 6% and agree to have the project under the 
control of the State Board of Housing.
    At about this time, a group of members of the Amalgamated Clothing 
Workers' Union were meeting to find a solution to their immediate housing 
problems. The gathering point was the Amalgamated Credit Union office. 
Here, most of them met once a week to approve the applications that were 
made for loans by members of the Credit Union. Gradually, they learned 
that they could be their own bankers. What they did not know at that time 
was how to be their own landlords. They knew that it takes a large sum of 
money to own a big house and to be the landlord of thirty, forty, or fifty 
tenants; none of them had much money. From their discussions, they 
concluded that perhaps thirty, forty, or more people, jointly, could put 
together that much money, and become their own landlord. They could also 
see that those who were willing to join, but could not raise their share 
of the money, could borrow the funds from the Credit Union.
    The cooperative idea took root. The A.C.W. Corporation was organized 
for the purpose of finding a way to build housing for all those who wanted 
to join without the risk of having the rent increased beyond the ability 
of the tenants to pay and without the risk of being evicted.

    A committee was selected to study the matter. Various ideas were 
considered. Some wanted to see two family houses built; others saw only 
the possibility of buying an old house and converting it for the use of 
the members. Still others wanted to see a new development built to meet 
the requirements of the member-cooperators. Some wanted the new 
development in one borough; some in another. However, there was agreement 
that the new location had to be so situated that it would be near the open 
spaces, parks, and trees where their families could enjoy plenty of fresh 
air, and generally convenient to places of employment.
    A site adjoining Van Cortlandt Park, the largest public park in New 
York City, was chosen as the spot where the housing community would be 
built. Van Cortlandt Park to the north, Mosholu Parkway to the east, and 
the Jerome Park Reservoir to the south made this an ideal location. 

        Initial Planning and Financing
        The group managed to put together $5000 to pledge as a deposit on 
the land. The initial plans called for the building of 303 units. 
Undertaking the construction of a development of this size, involving a 
cost of approximately $2,000,000, was not a simple matter. At no time did 
anyone in the group expect to be able to pay for the entire cost of his 
apartment. A mortgage was to be secured to provide the greater part of the 
construction cost. The questions were who was going to lend such a group 
such as this a million dollars or more on a venture that had not been 
tried; what would happen if construction was started and there were not 
enough funds to finish the project; what if the costs were eventually much 
higher than anticipated; and what if the carrying charges turned out to be 
too high for the members to pay. The pioneers of this group spent 
sleepless nights going over these problems. A way had to be found to give 
this new organization financial standing in the community.
    The acute shortage of housing in New York City was little by little 
attracting the attention of some of the leaders of progressive labor 
unions. Conferences were held at the suggestion of a well-known architect; 
they were attended by the representatives of the Amalgamated Clothing 
Workers' Union, as well as several other labor organizations including the 
International Ladies' Garment Workers' Union. At the request of Sidney 
Hillman, the president of the Amalgamated Union, the writer attended these 
conferences as an observer. He also attended the hearings in Albany on the 
proposed housing act. Not being fully satisfied with the constructiveness 
of these conferences, he reported his findings with the recommendation 
that the Amalgamated Clothing Workers' Union, as an organization, become 
the sponsor of the planned housing project at Van Cortlandt Park. He also 
suggested that the proposed cooperative take advantage of provisions in 
the newly-created State Housing Act. Before very long, it was decided that 
the A.C.W. Corporation remain as the construction company and the 
Amalgamated Housing Corporation, a new corporation, would take over the 
project when completed. This marked the entry of the Amalgamated Clothing 
Workers' Union into the field of housing. The writer, then an employee of 
the Union and president of the A.C.W. Corporation, was placed in charge, 
as president, of the newly-organized Amalgamated Housing Corporation.

      Financial Structure
    The State housing Act of 1926 provided that a limited-dividend company 
organized under that act must limit its financial structure to one 
mortgage paying not more than 5 % and not exceeding two-thirds of the cost 
of the project, or the appraised value, whichever was lower. Amalgamated 
Housing became the first limited-dividend company and had to comply with 
these regulations. Instead of the original investment of $200 per room as 
we had intended, each cooperator was asked to invest $500 (the estimated 
cost was $1500 per room).
    This created a serious problem for many of the prospective cooperators 
who were unable to supply the required equity. The Amalgamated Union and 
the Amalgamated Bank came to the assistance of these members. An 
arrangement was made to have the Jewish Daily Forward, a progressive labor 
newspaper in the city, pledge $150,000 with the Bank as a credit fund. 
This enabled the Amalgamated Bank to extend loans to prospective 
cooperators up to 50% of the total required-at a low-interest rate, and 
permitted them to repay this loan over a period of ten years. Some members 
were able to repay the loan in a short period by availing themselves of 
the opportunity to make loans through the Credit Union.
     With one-third of the estimated cost of the project supplied by the 
member-cooperators it remained only to secure the mortgage loan. This, 
however, did not come about too easily. None of the insurance companies or 
savings banks were ready and willing to take a chance and lend $1,200,000 
to a group of 303 tenant-owners. Metropolitan Life Insurance Company 
finally granted the loan, but only after a great effort was made by 
President Hillman. To satisfy the mortgagee, the Union had to guarantee to 
the insurance company the completion of the project. This however did not 
end the financial problem of this housing cooperative! The estimated cost 
of land and buildings, as envisioned, was to amount to $1,800,000. The 
actual cost, however, amounted to $1,925,000. The Jewish Daily Forward 
again came to the assistance of the housing cooperative. A temporary loan 
was arranged and it took several years before it was completely repaid.
         Completion of First Units
     November 1, 1927, marks the day when the .first handful of tenants 
moved into the almost completed buildings 4 and 5. It did not matter that 
the stairs leading to the entrances of those buildings were not finished. 
The utility company was not quite ready to hook up its wires and there was 
no light. To make matters worse, a penetrating cold rain continued during 
the entire day and turned the soil all around the garden into a sea of 
mud. But all these inconveniences did not dampen the spirit of the 
member-cooperators. They had waited too long to postpone their taking 
possession of the apartments for another week, or even another day.
     During the long year, when construction was under way, most of the 
members spent every free day at the site watching the buildings rise. 
Similarly, this was a exciting period for those charged with the 
responsibility of seeing the project completed. Lacking the technical 
knowledge of construction we had to engage the assistance of others. 
Within four months, all the 303 member-cooperators had moved into their 
new homes.
    The first group of buildings of the Amalgamated cooperative community 
consisted of six buildings, five stories in height. Five of the buildings 
were grouped around a long city block bounded by Saxon, Sedgwick, and 
Dickinson Avenues. The sixth building was situated on the block front from 
Saxon to the present Hill-man Avenue. The buildings were designed by the 
late architects, George W. Springsteen and Albert Goldhammer.
   In planning the development, it was our desire to provide cross 
ventilation in every apartment and to see that all the inhabitants had 
privacy. To accomplish this, twenty-nine separate staircases were 
provided. Each entrance led to either nine or fourteen apartments with two 
or three families on a floor. Most of the apartments had two exposures 
providing for plenty of sun and ventilation. Coverage by the buildings was 
restricted to 47.9%, thus leaving more than half of the land for gardens, 
walks, and open spaces. No elevators were provided; the restriction 
against multiple apartment buildings on the site was waived by the Radio 
Corporation of America, an adjoining neighbor, only on condition that no 
elevators be installed in the building up to the year 1955. With parks and 
open space on three sides, this development, after two to three years, 
looked like a group of buildings set in the middle of a large park and 
gave the impression of a college campus.

      Expansion Buildings 7 and 9
   The initial success of the Amalgamated Housing s venture was hailed by 
our friends as a bold stroke to solve the housing shortage. Editorially 
the New York newspapers gave a great deal of well-deserved credit to the 
Amalgamated Clothing Workers' Union. The Union's pioneering efforts to 
assist the wage earner obtain decent housing at a reasonable price were 
widely acclaimed. The self-help characteristics and the advantages of 
cooperative housing were at first recognized only by a few. Eventually, 
however, the general public, caught in the acute housing shortage, began 
to understand that the Amalgamated Housing Cooperative demonstrated what 
could be done if a group of people learned to work together.
    Before the first year's operation was completed, several hundred 
applicants registered for any possible vacancies. The low rental and the 
extremely attractive location appealed to a large number of people in need 
of housing.
    Plans were immediately made to add another building. A parcel of land 
fronting on Van Cortlandt Park South between the present Hillman Avenue 
and Gouvrneur Avenue was assembled. With no restrictions to contend with, 
this building was laid out in a fashion similar to the first block but 
with eight elevators. Some sections of the building were seven stories in 
height, others only six. Construction started immediately after 
Metropolitan Life Insurance Company agreed to supply the mortgage loan. 
With the assistance of the Amalgamated Clothing Workers of America a 
temporary construction loan of $200,000 was obtained from the New York 
Trust Company.
  Encouraged by the success accomplished thus far, the management of the 
project began to form plans for continued expansion. To avoid the 
possibility of any other organization being able to put up a building 
between our co-op buildings on the park side leading to Broadway, we 
acquired the contiguous land facing the park.

Another Cooperative is Organized
    In 1929, news of the success of the Amalgamated development reached 
Franklin D. Roosevelt, then the governor of the State of New York. Aaron 
Rabinowitz, member of the State Board of Housing representing that body on 
the Board of Directors of the Amalgamated Housing Corporation, reported to 
the governor, in glowing terms, of the new method used to solve a portion 
of the housing problem in New York City. At the urging of Roosevelt, the 
then Lieutenant Governor, Herbert H. Lehman, and Aaron Rabinowitz 
volunteered to assist with the financing -of a similar project in a slum 
area of the Lower East Side of the City. Sidney Hillman, encouraged by the 
results of the development in the Bronx, agreed that an example of 
cooperative housing on the East Side of Manhattan might pave the way for 
the rebuilding of the slums of the City by others. The Amalgamated Union 
therefore became the sponsor of the new cooperative.
    A square block of 60,000 square feet was acquired and a 
limited-dividend company was set up under the name of Amalgamated 
Dwellings, Inc. Lehman and Rabinowitz agreed to help finance the 
construction until all the apartments were subscribed for. They also 
agreed to set up a fund to assist prospective cooperators who could only 
invest 50% or more of the required $500 equity per room. The average 
carrying charges were set at $12.25 a room per month. The development was 
completed in November 1930.
In the beginning, the project was rather disappointing. The early effects 
of the depression and the lack of understanding of the cooperative idea 
were obstacles almost too difficult to cope with. Gradually, however these 
difficulties were overcome and the building was fully subscribed and 
occupied.
    During the time that Amalgamated Dwellings, Inc. was being built, the 
demand for more cooperative housing came from applicants who were 
interested in moving to the Van Cortlandt Park development. During this 
period, the cost of construction reached an almost all time low level, and 
the opportunity to erect another house with somewhat lower equity 
requirement was made possible. A plan was designed to erect a six-story 
building on the irregular block bounded by Gale Place, Orloff Avenue, and 
Van Cortlandt Avenue, to accommodate 115 families. The investment per room 
was set at $425 instead of $500. By the end of 1931, the number of 
cooperative apartments built stood at 856; 620 in the Bronx and 236 in 
Manhattan.
Organization
    At the very beginning, the following basic principles were established 
for the organization and administration of these cooperatives:
1.	Membership would be open to all without any restrictions to race, 
creed, or color.
2.	Irrespective of the amount of his investment, each stockholder 
would have one vote in the affairs of the corporation.
3.	Speculation was prohibited on the sale of the members' equity 
stock.
4.	Membership was not to be confined to people from any one industry.
5.	The greatest possible flexibility was permitted for the joining 
and withdrawal of members.
6.	The individual cooperator was made cognizant of the fact that he 
was not the owner of his apartment, but more importantly, he, collectively 
with all the others, was the owner of the entire cooperative.
7.	Perpetual leases were banned; instead, short-period leases were 
used.
8.	No dividends were to be declared on the stock and refunds were to 
be made on the basis of the total amount paid in carrying charges during 
the fiscal period.
9.	The sponsoring Union always emphasized that it was not the owner 
and did not exert any influence on the cooperatives. Its interest was the 
general solvency of the development.
10.   There would be a program of continuous education.
    These basic principles provided a firm foundation for successful 
operations and they have not been changed in thirty years. 
The articles of incorporation provided that the Board of Directors of 
Amalgamated Housing was to consist of five members with one of the five 
representing the State of New York. In the case of Amalgamated Dwellings, 
the Board of Directors was to consist of nine members with one 
representing the State.
    In order to avoid calling meetings of the Board of Directors too 
frequently, very often to take up only minor matters, it was agreed that 
in addition to the Board of Directors, a House Committee would be elected. 
This committee would take up any grievances arising between 
member-cooperators or against management. This committee would also assist 
management in an advisory capacity. The House Committee also had as its 
function the making of recommendations to the Board of Directors, either 
jointly with management or independently.
    In the case of Amalgamated Housing, the original members of the Board 
of Directors consisted of individuals interested in housing but who, with 
the exception of its president, did not live in the community. In the case 
of Amalgamated Dwellings, all of the directors lived outside of the 
cooperative. These directors, in addition to the functions mentioned 
above, were responsible for the establishing of general policies for the 
corporation; the increase or decrease of the maintenance charge; the right 
to declare any rebates; and above all, the selection of the manager for 
the development.
    This division of responsibility between the Board of Directors and the 
House Committee proved to be very useful to both cooperative 
organizations. In time, the membership at large realized its value. The 
original directors enjoyed the confidence of the members and were 
invariably re-elected as long as they were willing to serve. A few have 
served the organizations continuously since their inception.
    The size o the Board of Directors has been increased and cooperators 
living in the community have been added and have taken the places of 
directors who retired.
    The success of these housing cooperatives, to a large measure, can be 
attributed to the high caliber of the individuals who have served 
unselfishly and without any monetary reward as directors. It is a high 
tribute to the cooperative ideals and program that so many outstanding 
individuals from the community at large and officials of the Amalgamated 
Clothing Workers of America have given so generously of their time and 
talents to the advancement of these cooperative endeavors.