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There are 32 districts at the present time which have no post offices with receipts above $10,000. There are eight districts having Congressmen-at-large. There are 10 districts where there are large projects and only one project in the district which you may have to defer in order to keep within the amount.

Mr. CANNON. So that if you gave every district a project at this time that has an eligible project, it would be a maximum of 343 projects?

Mr. MARTIN. Yes, sir.

Mr. CANNON. If you had 343 projects at an average of $70,000, what would be the cost of a program of that character?

Mr. BACON. Is not that average low?

Mr. MARTIN. You could not use $70,000. For instance, 343 projects would cost approximately 45 million dollars.

Mr. LUDLOW. What would be the average per project?

Mr. MARTIN. That would be about $130,000.

Mr. LUDLOW. Instead of $70,000.

Mr. MARTIN. Yes.

Mr. WOODRUM. In figuring your 50-million-dollar set-up, are you taking into account the amount for augmentation?

Mr. MARTIN. In giving these figures; yes, sir, I am taking that into account.

Mr. WOODRUM. And coming within the 50 million dollars for all of that?

Mr. MARTIN. Yes, sir.

EFFECT OF DEFERRING APPROPRIATION FOR NEW BUILDING PROJECTS

Mr. LUDLOW. In this bill there is approximately $8,500,000 that ought to be appropriated in any event, for increasing the limitation of cost, for repairs, and so forth.

Mr. MARTIN. Yes, sir.

Mr. LUDLOW. And the balance, of approximately $14,500,000 is for new projects?

Admiral PEOPLES. Yes, sir.

Mr. LUDLOW. What particular harm would be done if we marked time and did not appropriate anything for new projects?

Admiral PEOPLES. Well, it would mean the deferring of a number of larger projects which have been deferred from year to year, which we have been unable to go ahead with.

Mr. LUDLOW. Would there be some acute situation that would be neglected if that is not done, or will it mainly be predicated on the idea of giving every Congressman one building?

Admiral PEOPLES. Not in the $23,000,000; no, sir.

Mr. LUDLOW. Could you not tell us a little more definitely what would be the effect if we just marked time on the new projects?

Admiral PEOPLES. It means the continuation of rentals in a number of the larger cities, not only for buildings, but for rented space for permanent agencies. Also, it means the continuation of rentals for a number of garages where the Post Office Department is now paying rent. It also means

Mr. BACON (interposing). What effect would it have on your organization, Admiral?

Admiral PEOPLES. We would have to let go a great many of the permanent people that are now paid out of the reimbursable program.

Mr. BACON. You would have to dissipate your organization, and if you resumed you would have to go through the growing pains of rebuilding the organization?

Admiral PEOPLES. Rebuilding it again; yes, sir.

Mr. LUDLOW. As to these conditions you just described, we have had those conditions for a good many years up to this time, and it would not be a great change in conditions that have existed in the past.

Admiral PEOPLES. There is a great deal of difficulty in building up an organization to handle promptly a large building program.

Mr. LUDLOW. I am not speaking about the organization; I am speaking about conditions of rental of space, and other conditions you described.

Admiral PEOPLES. They have continued right along.

Mr. LUDLOW. It would be a continuation of a condition that we have had all along, and there is no acute situation in any instance that would necessitate this new building program; is not that true? Admiral PEOPLES. That is perfectly true.

Mr. PURDUM. May I make an observation at that point, Mr. Chairman?

Mr. WOODRUM. Yes.

Mr. PURDUM. I think a material percentage of the new buildings will be to house postal units. There are acute situations which are becoming more and more acute from day to day in the Postal Service because of very congested quarters and the great increase in business.

The post office is where business of the people of the country is transacted daily; and there is no governmental activity more closely interwoven with the business and social business of our people than the post office.

At some of these places we are now working under very adverse conditions. We are criticized for that. Some action should be taken, in my opinion, to meet the situation. I mentioned yesterday the cases of San Juan, P. R., Harrisonburg, Va., and Charleston, W. Va. I also mentioned the situation obtaining at the Leper Farm, at Carville, La. There are a great number of places where we are performing Government business with the people of the country under the most adverse conditions. We have large postal units in quarters that they really should not be in. As I see it, this is a situation that affects the people of the country primarily. When you expend public funds for Federal buildings, the people see for what purpose the funds have been expended, and the public makes daily use of the buildings that are provided. As I said yesterday, our postal business is increasing greatly, and this year it will, in all probability, be above $700,000,000.

AMOUNT REQUESTED OF AND ALLOWED BY BUDGET BUREAU FOR fiscal YEAR 1938

Mr. MCMILLAN. Admiral, how was this estimate of $23,000,000 arrived at by the Budget Bureau? Is that a real estimate, or is it an arbitrary figure?

Admiral PEOPLES. We submitted an estimate to the Budget originally last October on the basis of a year's program which amounted to approximately $50,000,000. It included a list of major projects

running up to approximately about $23,000,000, and the Budget arbitrarily eliminated the congressional distribution feature of it, and allowed the $23,000,000.

Mr. MCMILLAN. Your estimate, as I understand it, was around $50,000,000.

Admiral PEOPLES. Yes, sir; that was on the basis of a year.

Mr. MCMILLAN. In other words, it was to contain in effect about the same program you have had for the last 2 or 3 years.

Admiral PEOPLES. Approximately so; yes, sir.

Mr. MCMILLAN. Is there any authority of law for this estimate of $23,000,000?

Admiral PEOPLES. None except that these projects have been authorized for selection as funds become available. There is nothing specific.

Mr. MCMILLAN. It is not on the basis of emergency?

Admiral PEOPLES. No, sir.

Mr. MCMILLAN. It is not on the basis of the emergency that we have operated under heretofore?

Admiral PEOPLES. No, sir.

GRAND CENTRAL STATION POST OFFICE AND OFFICE BUILDING, NEW YORK

Mr. WOODRUM. The next item is for the "Grand Central Station Post Office and Office Building, New York, N. Y.", as follows [reading]: For carrying out the provisions of the Act approved July 12, 1932 (47 Stat. 656), authorizing purchase of land and building thereon, for a post office building and/or for other Government purposes, $10,106,963.

I will state for the record that the committee has been requested by Mr. Dickstein, of New York, to give him an opportunity to appear later to present evidence for the consideration of the committee in connection with this transaction.

We would like to have now your statement in regard to this item, and you may include in the record such documentary exhibits as may be necessary in explanation of it before we have the hearing with Mr. Dickstein.

Mr. REYNOLDS. Mr. Chairman, in accordance with the authority contained in the act of July 12, 1932, the Secretary of the Treasury entered into a contract for the purchase of 452 Lexington Avenue, New York City, from the New York Central Railroad Co. for the use of the Post Office Department. Title was transferred on December 28, 1932.

The purchase price is $9,000,000, payable on June 30, 1937, except that the Treasury Department at its election may pay any part of the agreed purchase price prior to said date, and except that commencing on the date of conveyance of title and continuing until January 1, 1934, there should have been paid to the railroad company, to be applied on account of the agreed purchase price, a sum not in excess of the aggregate monthly rentals being paid by the Post Office Department at the time of the purchase for the spaces occupied by the latter in the purchased building and in the adjacent buildings to the north and south, and excepting further that commencing on January 1, 1934, and continuing to the date of the payment of the purchase price, there should have been paid each month an amount equal to one-twelfth of the product arrived at by multiplying the aggregate

square-foot area under the leases occupied in the three buildings mentioned by a square-foot rate of $2.50.

At the request of the Post Office Department, no payments were made on account, as provided in the purchase contract in accordance with the above plan, pending an investigation which has been recently settled by the Attorney General. The investigation was instituted at the instance of certain outside parties who charged that the deed was invalid, but the Attorney General has found that none of the charges were well-founded and that the deed is valid. However, as a clarification of certain minor items in the deed, a supplemental deed has been entered into which has been approved by the Attorney General.

The Post Office Department transferred $32,280.65 to the Treasury Department, which amount has been paid to the New York Central Railroad Co. on account of the purchase price. There is now in process of transfer to this Department the additional sum of $73,299.14 which amount it is expected will be available for payment to the New York Central Railroad Co. about January 1, 1937, in order to further reduce the interest payments.

The contract of purchase also provides that there shall be paid interest at the rate of 3 percent per annum on the unpaid balances of the purchase price from the date of conveyance of title to the date of settlement in full. The attached is an estimate of the funds necessary for the completion of purchase of the property, this estimate being based on a payment of $105,579.79 to the railroad company at an early date, and a settlement in full with interest on June 28, 1937, the appropriation necessary for final settlement being $10,106,962.11.

The estimate of the funds necessary for the purchase of this property at 452 Lexington Avenue, New York, is as follows:

Purchase price - -

3 percent interest:

Dec. 28, 1932, to Dec. 28, 1933.
Dec. 28, 1933, to Dec. 28, 1934.
Dec. 28, 1934, to Dec. 28, 1935.
Dec. 28, 1935, to Dec. 28, 1936.
Dec. 28, 1936, to June 28, 1937.

Total__

Payments on account:

Dec. 28, 1932, overpaid rent__

Interest on $526.31, Dec. 28, 1932, to June 28, 1937, at 3

percent

Sept. 15, 1936, payment.

Interest on $32,280.65, Sept. 15, 1936, to June 28, 1937, at 3 percent

Dec. 28, 1936, payment 1

Interest on $73,299.14, Dec. 28, 1936, to June 28, 1937, at 3 percent.

Total payments on account, including refunded interest..

Balance due on June 28, 1937____

1 Contingent upon additional transfer of funds from the Post Office Department.

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The amount of $73,299.14 was not paid until January 15, 1937, which reduces the interest deduction from $1,099.48 to $995.65, thereby increasing the balance due from $10,106,962.11 to $10,107,065.94.

Mr. WOODRUM. That is the balance due in June? Mr. REYNOLDS. On June 28, 1937. It is figured up to June 28. Mr. Chairman, Mr. Martin is quite familiar with this matter, and we also have with us Mr. Witman, who went through the entire negotiations. I think they will be able to answer any questions you may wish to ask.

Mr. WOODRUM. I imagine that at the present time all the committee wants to have is a general statement on the subject. We may have some special questions to ask later.

Mr. BOYLAN. Do I understand that this is a contractural obligation, that we have entered into?

Mr. MARTIN. Title is vested in the United States.

Mr. BOYLAN. This appropriation is requested in order to enable us to fulfill the terms of an agreement that we have heretofore made. Mr. MARTIN. Yes, sir.

Mr. TABER. We have been in possession of the property since when? Mr. MARTIN. We have been in possession since the date the title passed, on December 28, 1932.

Mr. TABER. When was the contract made?

Mr. WITMAN. The contract was made December 23, 1932, and the title was vested in the Government on December 28, 1932, upon the signing of the deed, which was recorded on December 29 of that same year.

Mr. TABER. The act was approved July 12, 1932.

Mr. WITMAN. Yes, sir.

Mr. CANNON. What is the history of this?

Mr. MARTIN. This building was owned by the Grand Central Railroad.

Mr. TABER. You mean the New York Central.

Mr. MARTIN. Yes, sir; the New York Central Railroad Co.
Mr. CANNON. For what purpose was the building used?

Mr. TABER. It is right around behind the Grand Central Terminal, is it not?

Mr. MARTIN. Yes, sir; right over the tracks of the Grand Central Terminal. The terms of the contract entered into between the railroad company and the Government involved the handling of the mails.

Mr. WOODRUM. So far as the Government is concerned, it is a complete transaction, except for the payment of the money.

Mr. MARTIN. Yes, sir. I have a full chronological history of this matter which I will be glad to leave with the committee.

Mr. WOODRUM. We also have a copy of the contract, if anyone wishes to see it. I do not know whether it should be placed in the record.

Mr. LUDLOW. When did the title pass to the Government?
Mr. MARTIN. On December 28, 1932.

Mr. LUDLOW. Why has the matter not been cleared up before this? Why this long delay?

Mr. MARTIN. This property was purchased, but parties who were interested in other property nearby claimed there were other properties available at a less price that were more suitable for the purpose. Mr. LUDLOW. Was that after we had already entered into the contract?

Mr. MARTIN. Yes, sir; before and after the contract. They also claimed that the contract made for this particular purpose was invalid.

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