In 1857 a select committee of the state legislature described the forces that were shaping New York:
As our wharves became crowded with warehouses, and encompassed with bustle and noise, the wealthier citizens, who peopled old “Knickerbocker” mansions, near the bay, transferred their residence to streets beyond the din; compensating for remoteness from the counting houses, by the advantages of increased quiet and luxury.
Their habitations then passed into the hands, on the one side, of boarding house keepers, on the other, of real estate agents; and here, in its beginning, the tenant house became a real blessing to that class of industrious poor whose small earnings limited their expenses and whose employment in workshops, stores, and about the wharves and thoroughfares, rendered a near residence of much importance. At this period, rents were moderate, and a mechanic with family could hire two or more comfortable and even commodious apartments, in a house once occupied by wealthy people, for less than half what he his now obliged to pay for narrow and unhealthy quarters.
This state of tenantry comfort did not, however, continue for long; for the rapid march of improvement speedily enhanced the value of property in the lower wards of the city, and as this took place, rents rose, and accommodations decreased in the same proportion. At first the better class of tenants submitted to retain their single floors, or two and three rooms, at the onerous rates, but this rendered them poorer, and those who were able to do so, followed the example of former proprietors, and emigrated to the upper wards.
The spacious dwelling houses then fell before improvements, or languished for a season, as tenant houses of the type which is now the prevailing evil of our city; that is to say, their large rooms were partitioned into several smaller ones (without regard to proper light or ventilation), the rates of rent being lower in proportion to space or height from the street; and they soon became filled, from cellar to garret, with a class of tenantry living from hand to mouth, loose in morals, improvident in habits, degraded or squalid as beggary itself.
Cited by Edward Banfield The Unheavenly City Revisited (1974).