Mr. THOMPSON. We are representing a company known as the Anahma Corporation. Mr. Heckscher may desire to be heard.

Mr. WOODRUM. You may include in the record, when you revise your statement, the names of the people and companies you represent. Mr. BROIDO. I will do that.

Mr. WOODRUM. All right, gentlemen, we are ready to hear you.

STATEMENT OF MR. LOUIS BROIDO, ATTORNEY AT LAW, 551 FIFTH AVENUE, NEW YORK, REPRESENTING VARIOUS PROPERTY INTERESTS

Mr. BROIDO. Mr. Chairman, I would like to file with the committee, if I may, a copy of the brief and accompanying exhibits which represent the fruits of my labors in this matter.

Mr. WOODRUM. You may file them with the committee, but I do not know that they can be included in the record.

Mr. BROIDO. I think it would be entirely too costly to include them in the printed record. I will simply file them for your consideration. At the outset, I want to say to you gentlemen that this question is not an easy one. I am here under some difficulty for this reason: I was retained by these property owners in January 1935, knowing nothing about the matter at all. I was asked to make a study of the matter throughout its history, and to prepare a brief of my conclusions. I examined the history of the Grand Central Terminal, going back to 1907, including the legislation both State and Federal, coincidental with the construction of the terminal, and including, also, the contract between the New York Central Railroad, the New York & Harlem Railroad, and the New York, New Haven & Hartford Railroad. Under a lease which was entered into the New York Central Railroad became practically the owner of the New York & Harlem Railroad Co.'s interest in the tracks and terminal. My research necessarily covered a long period of time, and the matter became one of great interest to me. My brief was filed with the Attorney General of the United States and with counsel for the Treasury Department.

Mr. WOODRUM. What Attorney General was that?

Mr. BROIDO. It was filed in Mr. Cummings' Office, and it was subsequently filed in the office of Mr. Oliphant, counsel for the Treasury Department. It received long and serious consideration at the hands of the Procurement Division of the Treasury Department. To those officials, I wish to pay tribute for their industry in studying the questions presented. Last summer I personally accepted a post as an executive officer of one of the larger corporations for whom I had been doing legal work, and of which I had been a director for a number of years. Consequently, while I am not now devoting my time to the general practice, I have felt that I owe these particular clients here the duty to see this matter to a conclusion. We have been knocking at the gates for several years to obtain a hearing. I felt that whenever an opportunity presented itself, I should come here with the results of my personal investigations and research.

I think the best summary I can give you would be to give you, first, the history of the steps that have been taken in this transaction, showing how it came to your doorstep. I think I should do that before going into the merits of the controversy.

This act to which you have referred gave rise to hearings, subsequent to the introduction of the bill, before the House Committee on Public Buildings and Grounds, on June 3, 1932, and before the Senate Committee on Public Buildings and Grounds on June 8, 1932. The hearings were sketchy, and practically ex parte, because of the fact that nobody appeared who objected to the transaction. Nobody was heard under oath, and nobody was there to give expression to any of the doubts that might arise. No representative of the New York Central Railroad appeared and no one appeared with an objection to the legislation. That is because there were other parties at interest, I think, other than the New York Central Railroad, who were the real leaders and conductors of this legislation. When the bill was passed, Mr. Heckscher, who is present, published in a New York newspaper a series of advertisements, calling the attention of the Government and of the people at large to the fact that the price set forth in the bill was exorbitant. That was in 1932, in the latter half of the year, when the bank panic was only 9 months away, and at a time when real estate in New York was in a terrible slump, as evidenced by the testimony of the Interstate Commerce Commission in this very matter. He protested against the conclusion of the transaction, which he will personally tell you about. As a result primarily of his efforts, a petition of the New York United Real Estate Owners was filed with the President. Mr. Hoover signed a memorandum on July 12, 1932, at the time he approved this bill, in which he said:

I have today signed House Resolution 12360, which permits the Treasury Department to appraise and negotiate for a post-office site in the city of New York. This bill is purely permissive, and does not commit the Government to purchase.

Now, this is the part which I want to call to your attention:

No commitment will be made before the congressional authorities have an opportunity to examine into this matter during the next session. I make this statement because a number of protests have been received from other property owners in New York City who are under the impression that the law provides for the acquisition of the property concerned at a specific price, which is not the case. Now, that memorandum of the President cannot be found. It has to the best of our knowledge disappeared from the files and cannot be located. In my opinion, it has the force of a directive or executive order to the President's subordinates in the Treasury Department. That, in our opinion, is an order over the signature of the President, and, if so, no executive officer, no Under Secretary of the Treasury, and no Fourth Assistant Postmaster General would be authorized to bind the United States to purchase this or any other piece of property. In the dying days of the Hoover administration, on December 23, 1932, this transaction was consummated through a deed which was recorded on December 29, 1932, by which the title to this property, such as it is, was conveyed to the Government of the United States. The property then went off the tax rolls of the city of New York. From that day to this, no congressional committee or congressional authority of any kind or character has learned anything about this transaction. I wish now, on behalf of these property owners, and the property owners who object to the transaction, to thank this committee for giving them the opportunity to present the facts to the Congress.

I might say in this connection, that the motive of these property owners is one of personal interest. They hope to be able to sell some of their own property to the United States Government, but since there are so many blocks of property involved, nobody knows where the lightning might strike. They have supported me and have paid the expense of drafting the brief and exhibits, as well as other expenses for technical services, with the knowledge in mind that some of them could not sell and that, perhaps, none of them would sell their property to the Government.

I find that as a result of my studies of this transaction, there is involved here an important matter of policy which involves the Treasury Department, the Attorney General, and the Post Office Department.

This matter was brought up on the floor of the Senate by Senator Blaine in 1933, objecting to the price of this building, and objection was also made by Senator Reed.

Mr. WOODRUM. A moment ago, you stated that a memorandum signed by President Hoover had disappeared from the files.

Mr. BROIDO. Yes, sir.

Mr. WOODRUM. What authority do you have for that statement, or how do you know what was contained in such memorandum?

Mr. BROIDO. The memorandum has been personally seen by several people in New York. At the time of its signing, that statement was made to newspapermen. A number of our people have endeavored to locate the document here. I believe Senator Thompson made serious efforts to run it down, but it could not be found.

Mr. THOMPSON. The memorandum was printed, and it can be found in the files of the United States Daily for July 12, 1932.

Mr. BROIDO. Nothing happened in connection with this property from the time the deed was placed on record until the inauguration of President Roosevelt who, we have been informed, issued a stop order saying that no money would be paid. Not having access to the official files we have been unable to verify all of these facts; but we do know the money was not paid.

The price under the bill was to be $9,000,000, with interest at 3 percent, but I do pay this homage to the President that as a result of his action payment has been held up and no application has been made for any appropriation from the Congress for the payment of the purchase price, except that the original bill, I believe, wrongfully and illegally made an appropriation for a payment toward the purchase price from the money which your committee each year appropriated for the payment of rent for certain post-office space already occupied in the building and in adjoining buildings on which they held a lease.

Now, that bill authorizing the purchase came from the Post Office Department, and not from the Appropriations Committee. On the first page of your calendar I find this provision, that no bill or resolution carrying an appropriation may be reported by any committee except the Appropriations Committee.

Mr. TABER. Do you have a copy of the bill?

Mr. BROIDO. Yes, sir; I have a copy of the bill. You have been appropriating money to pay the rent each year on the property leased by the Post Office Department, but that money has been used for making partial payments on the purchase price, without authority for such use having been obtained from the Appropriations Committees

of the House and Senate. That, as has been pointed out to the Attorney General, was an improper procedure.

Now, as I said, nothing happened to the building, such as it was. The post office occupied the same space that it had been occupying ever since 1911, when they leased the building space. However, no taxes were paid on the property by the New York Central Railroad Co. since 1932, because the property was then placed upon the exempt list as being United States Government property.

As I have stated, I was retained to study this question in January of 1935, and this brief I have filed with you was in course of preparation from January of that year until July 1935, when the brief was filed with the Attorney General's office, which, after study, came to the conclusion that the legal points which I raised were not of a kind which they believed would entitle the Government to set the contract aside. They stated that the Attorney General's office had no standing to determine the merits as to the purchase price, or as to the availability of the building for the purposes for which it was purchased or whether or not Congress was misled. They held they had no standing to determine questions as to the value of competing properties, if any, or the availability of such properties. They say they were not asked by the Post Office Department to do that, nor were they asked by the Post Office Department if the transaction could be set aside.

Then we went over to the Procurement Division. They gave it very serious study for some time, but on the legal question, they came to the same conclusion. It was and is our contention that Congress had been misled. It had been misled by statements made before the committees, and we contended that if the facts had been presented to the proper committees, the bill would not have been passed and if the facts are known to this Congress, the money will not be appropriated.

We were advised that the Post Office Department considered the contract invalid and as not complying with the bill which authorized the purchase. However, the Post Office Department had washed its hands of the question of the legality of the transaction, taking the position that the matter of the purchase of a site was a matter for the Procurement Division of the Treasury Department. I think the Post Office Department has felt that the transaction was one which arose in a previous administration, that it was not their baby, so to speak; that it was up to the Treasury Department to decide whether to complete the purchase or not and that if the Congress appropriated the money the Post Office Department would use the property; and this I say in spite of what I believe to be the opinion of the Post Office Department or at least of its solicitors, that the transaction was invalid. The official position has been taken, I believe, that the matter of the legality of the transaction could not be passed upon by the Law Department of the Post Office Department but that the question was one for the Treasury. I do not believe that the Post Office Department has any right to adopt such a nugatory attitude in regard to this transaction which, after all, commits the Government to an expenditure of approximately $12,000,000 for the benefit of that Department.

The Procurement Division came to the conclusion that some of the important objections which I have set forth in my memorandum were so apparent and so outrageous that in the summer of 1936-despite

their legal conclusion that they could do nothing about setting aside the transaction-either through threatening to set it aside or through other legerdemain, the Procurement Division finally forced the New York Central Railroad to rewrite the contract. They rewrote the contract and added millions of dollars to the value of the property for the United States, without a penny of compensation paid the New York Central Railroad, which is a clear admission of the wrongfulness of the original transaction and a confirmation of those things which I set forth in my memorandum. I have been told by various officials of the Government that we accomplished a great deal therethat we gained a wonderful triumph for the Government in doing that. I have been told by the Government officials that I have been acting as sort of unofficial Attorney General for the United States and that as a result of the efforts which we put forth in behalf of these objecting property owners the United States now has a much better deal than it had under the original contract to which we objected. Despite these corrections made last summer by supplemental agreements which have been recorded and which relate wholly to the terrible set-back provisions in the original agreement, I am still of the opinion that the restrictive covenants in the contract are still bad and affect the title which the Government has acquired.

Last year, despite the fact that no bill had been introduced providing for the appropriation of the purchase money, the Procurement Division requested and obtained an appropriation of $1,250,000 for remodeling the property to make it fit for post-office purposes. It will be recalled, as I have stated, that when the hearings on the original bill were held it was definitely stated that the railroad company would remodel the property, and that it would be delivered to the Government completely remodeled for post-office purposes.

From that time, we have done nothing about the matter, hoping we would have an opportunity to come down here and present the matter to Congress.

There is one other thing I tried to do: The New York Central, at some time, either prior to or after 1933, borrowed from the Federal Government, I think, $15,000,000 through the R. F. C. The Reconstruction Finance Corporation made the loan made under the Reconstruction Finance Corporation Act. Last year, at a time when the railroad was seeking the flotation of a bond issue they endeavored to obtain an extension of the loan from the R. F. C. until, I believe, 1942. It was apparently vital to get this extension in order to float the bond issue. At that time, I wrote to the Comptroller General of the United States, and to the Chairman of the Reconstruction Finance Corporation, Mr. Jones, stating that sicne the Government was committed to a payment of only $10,000,000 in cash to the New York Central, it would only be good business practice if that sum should be credited on account of the debt due the United States on account of the Reconstruction Finance Corporation loan. It would have been an easy and business-like thing to do. The answer I received from the Comptroller General was purely legalistic and formal. It was to the effect that the provisions of the Reconstruction Finance Corporation Act, providing for loans to railroads and their repayment had nothing to do with, and therefore, could not be considered in connection with, any payment that might be due the railroad under House Resolution 12360. Mr. Jones advised me that the extension